Claiming expenses when away on business

Written by Inland Revenue and RightWay | 18 December 2017

What you can claim

In general, when you’re away from home you can claim for:

flights
taxis, or mileage if you use your own car for business travel
accommodation
meals and snacks.

Accommodation

If you’re attending a work-related meeting, conference or training course that requires an overnight stay, you can claim the cost of accommodation, eg hotel, motel or short-term rental.

If an employee is working away from home for an extended period, eg on secondment, you can claim for accommodation, or any accommodation allowance you pay, as long as they won’t be gone for more than two years (or three years for capital projects).

Accommodation allowances (external link) — Inland Revenue

Food and drink

If you or one of your employees buys a meal while travelling on business, the cost is 100% deductible.

But you can only deduct 50% of the cost of food and drink if either:

The trip is mainly for the purpose of enjoying entertainment, eg a team bonding trip.
The meal or function involves an existing or potential business contact as a guest.
A celebration where you won’t be working, eg a reception, or a staff Christmas party.

You or your employees can also claim for snacks and refreshments, eg tea and coffee, while they’re away if you normally provide these refreshments at work.

Meal and clothing allowances (external link) — Inland Revenue

Entertainment

On a work trip, you can claim the cost of entertainment if its purpose was to:

build up business contacts, eg taking a potential client out for dinner
keep your employees happy, eg providing tickets to a show
promote your goods or services, eg offering food to entice customers to a stall at an expo.

If the entertainment is helping you earn your income, it's usually deductible when it's time to work out your tax.

Within New Zealand, entertainment expenses can be either 50% or 100% claimable — check with Inland Revenue.

If you’re travelling overseas, you can claim 100% of work-related entertainment expenses.

Entertainment expenses (external link) — Inland Revenue

If an employee is on a work trip, you can pay them an allowance to cover meals and day-to-day expenses.

You can claim this allowance as a business expense at tax time.

Travelling allowances (external link) — Inland Revenue

Overseas travel expenses

Keep detailed records if you’re travelling overseas on business — especially if you’re also taking a holiday at the same time.

If:

You’re away on business but take a free half-day to enjoy exploring a new city, the personal part of the trip is incidental. You can claim all your travel expenses.
You’re going on holiday but happen to meet up with a couple of business contacts while you’re there, the business part of the trip is incidental to the holiday. You can’t claim any of your travel expenses.

If you combine a business trip with a holiday, you must split out your expenses and only claim the portion that relate to the working part of the trip.

The best way to do this is to keep an itinerary or diary. It should provide enough information to calculate all your costs and make a reasonable split between business and personal expenses.

As well as all the usual records, you should keep:

letters of introduction
business contacts/cards
details of firms visited and business conducted
details of time out from the business itinerary for personal purposes.

FACT:
Overseas travel expenses don’t generally include GST

Travel to buy assets or equipment

If the purpose of the trip is to buy business assets, travel expenses are usually treated as part of the cost of the asset — they’re a capital expense and can’t be claimed.

Business assets are the tools and equipment of your trade. A business asset could be a printing press or the art hanging in your office, as long as it:

is valued at more than $500
has a useful life of more than one year
can't be claimed in full as a business expense.

Assets (external link) — Inland Revenue

Try to pay for anything that could be a claimable expense through your business account.

Then you've got an easy-to-record paper trail.

Records to keep

Keep all expense receipts and invoices you receive — you don't need to provide the receipts with your tax return, but will need them on hand if Inland Revenue asks for proof.

As well as invoices, receipts and tickets, you should also keep details of:

reasons for the trip
date of the trip
your itinerary
cost of car hire, and air, bus and taxi fares
cost of accommodation, meals and incidentals, eg coffees or morning tea
time spent on business and personal activities — a good way to prove the
business portion of your travel expenses is by keeping a diary of your travels.

Case studies

Crafty in the capital

Dom runs a boutique craft supplies shop based in the Bay of Plenty. Keen to expand his customer base — and explore new product options — he decides to run a booth at an expo in Wellington.

This involves a one-night stay in the capital. During the day, he attends the expo. In the evening, he takes a contact out for dinner to discuss a potential new line of stock for the store. He pays for everything on his business’s credit card, and keeps receipts.

Dom can claim:

100% of the cost of his flights
100% of taxi fares to and from the airport, and around Wellington
100% of his night’s accommodation
100% of the cost of breakfast and lunch
50% of dinner with the business contact.

Mixing business with pleasure

Jan is a software engineer who works as a self-employed contractor. She pays for herself to attend a two-day software conference in Miami. While there, she takes an extra four days to travel around Florida and visit Disney World with her partner.

Jan can claim:

two nights of accommodation while at the conference
the cost of her meals on those two days — but not her partner’s meals
taxi fares to and from the airport, and from the hotel to the conference each day
one third of the cost of her flights (but not her partner’s), because two of the six days she’s away are for business.
She can’t claim any expenses from the portion of her trip when she wasn’t working — these are holiday costs .

Jan talks to her accountant about claiming expenses when mixing business and personal travel. She then contacts Inland Revenue about her partner’s expenses, and is asked to send a detailed itinerary and total costs of the trip. This is because there are some circumstances when business travellers may be able to claim some of a partner’s expenses if they travel together.

Written in association with Inland Revenue and business.govt.nz. Full article available here.

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