As a general rule, you must declare any travel allowance you receive as income in your tax return.
You do not have to declare the allowance as income in your tax return if all of the following apply:
- the travel allowance is not shown on your income statement or payment summary
- the travel allowance doesn’t exceed the Commissioner of Taxation’s reasonable allowance amount
- you spent the whole allowance on deductible accommodation costs (and meal and incidental expenses, if applicable).
If you don’t declare your allowance as income, you can’t deduct your accommodation costs (and meal and incidental expenses, if applicable) – even if they are more than your allowance.
You can claim a deduction if the allowance you received has been folded into your salary and wages. You must keep written evidence of your expenditure.
On this page:
- Accommodation expenses claims
- Keeping records for accommodation
- Claiming expenses for accommodation you purchase or rent
- Examples of accommodation expenses
Accommodation expense claims
You can deduct your accommodation costs (as well as meal and incidental expenses), if all of the following apply. You:
- declare any travel allowance you receive as income on your tax return
- are required as part of performing your work duties to travel away from home
- are only working away from home for relatively short periods of time (you aren’t living away from home)
- did not incur the expenses because of a choice you made to maintain your residence in a different location to your place of employment
- have a permanent home at a location away from the work location that you are travelling to
- pay for the accommodation yourself and aren’t reimbursed for the costs you incur.
Keeping records for accommodation
To claim a deduction, you generally need to keep written evidence to substantiate your costs.
Substantiation isn’t required if:
- you have received a travel allowance for travel within Australia
- the deduction you claim for accommodation (and meals and incidental expenses, if applicable) is equal to or less than the amount we consider reasonable.
The amounts we consider reasonable are published each year. Taxation Determinations TD 2018/11 and TD 2019/11 set out the amounts for various travel destinations for the 2018–19 and 2019–20 income years respectively.
Even where you don’t need to substantiate your costs, we may still ask you to show all of the following:
- you paid the expense yourself
- the cost is deductible – you met the conditions required to deduct the expense
- you received a travel allowance
- you stayed in short-term commercial accommodation.
- TD 2018/11 Income tax: what are the reasonable travel and overtime meal allowance expense amounts for the 2018–19 income year?
- TD 2019/11 Income tax: what are the reasonable travel and overtime meal allowance expense amounts for the 2019–20 income year?
- TR 2004/6 Income tax: substantiation exception for reasonable travel and overtime meal allowance expenses
Claiming expenses for accommodation you purchase or rent
Most people required to travel away from home temporarily to perform their work duties stay in short-term commercial accommodation. For example a hotel, motel or serviced apartment. However, a person may decide to stay in rented accommodation or in accommodation they have purchased.
The costs of financing, holding and maintaining accommodation you purchase or rent to stay in when you travel to perform your work duties may be deductible as work-related travel expenses.
You must declare any travel allowance you receive as income in your tax return if you want to claim a deduction for your accommodation costs (as well as meal and incidental expenses).
Types of costs
Costs you can claim:
- interest on loans used to purchase the accommodation
- general maintenance of the accommodation
- the decline in value of certain assets, such as furniture and household equipment.
Costs you can’t claim:
- capital expenses such as the costs of purchasing or renovating the accommodation
- purchase costs of furniture, household equipment and other assets for the accommodation.
This content doesn’t explain capital gains tax (CGT) implications.
Apportioning your costs
You might have to apportion your costs of financing, holding and maintaining accommodation you purchase or rent (see Costs you can claim) if either:
- the costs are disproportionate to what you would have spent on suitable commercial accommodation for the period of travel
- the accommodation is used for private or domestic purposes and not wholly for work-related travel.
You can’t claim a deduction for the cost of financing, holding and maintaining your home.
Service.nsw.gov.au. 2021. Start or grow a business in NSW | Service NSW. [online] Available at: <https://www.service.nsw.gov.au/guide/start-or-grow-business-nsw#developing-your-premises> [Accessed 30 March 2021].