Mention About Foreign Trip in Income Tax Return

Mention About Foreign Trip In Income Tax Return

Good news for business owners who travel across countries often; you can claim deductions for overseas travel! Didn’t you know about it?

With appropriate record keeping, you can significantly reduce the after-cost of your overseas trip or even treat your whole trip as deductible. However, the travel expenses for an overseas trip are only deductible for business purposes.

We are not discussing you and your family spending your vacation in a beautiful resort with high-end amenities. So, if you also go on trips for business work, this blog is just for you; know whether you can claim deductions and, if yes, how. Let’s get going!

Overseas Travel Expenses: Are They Deductible?

The costs incurred during legitimate business travel across different countries are deductible in Australia. A legit business trip refers to travelling to expand your existing business, professional or business knowledge. People often get confused with overseas travel expenses that are deductible and that are not, but you won’t, as we are here to help you understand.

Overseas travel costs are deductible to the extent they are incurred for the purpose of producing assessable income; otherwise, you may have to pay total taxes on them. So, it is the purpose of your trip that will determine whether or not you can claim deductions for overseas travel. Therefore, you must document your trip and keep all the receipts of expenses incurred during and after travel.

Can You Claim Deductions for a Mixed Purpose Trip?

People often travel overseas with mixed purposes; for instance, their primary purpose is to enhance their knowledge to expand their business, while the other is to catch up with their friends and family.

So, if this happens to you, can you claim deductions for overseas travel expenses?

The answer is yes; you can claim deductions but for only the expenses incurred for business purposes. See this example to understand it better: –

  • One goes on a foreign trip of ten days.
  • The primary purpose is to do market research for business, but also meet friends & relatives and have fun sightseeing.
  • So, that person spends eight days doing market research and other business work while other days is spent sightseeing.
  • In this case, the costs incurred for business purposes (i.e., of eight days) will be deductible. However, it is not allowed to claim deductions for the costs incurred for personal purposes (i.e., sightseeing or doing fun activities).
  • Bear in mind that in this scenario, the primary purpose is market research. Hence, the airfare would be 100% deductible.

List of Deductions Claimable for Overseas Travel Expenses

So, now that you understand how tax deductions work for overseas trips let’s determine the deductions you can claim for overseas travel.

  • Accommodation Expenses
  • Food & Meals Expenses
  • Travel Expenses (i.e., airfare)

What You Need to Claim Deductions for Overseas Travel?

To claim deductions for overseas travel, an individual needs proof of expenses in Australia, including: –

  • Invoices & Receipts
  • Duration of Stay
  • Copy of Flight Ticket

Final Verdict

Business owners often have to travel across countries to do market research and design strategies to expand their existing business. However, overseas trips are always expensive, so you should always claim deductions for your overseas travel for business purposes.

If your primary purpose for overseas travel is to gain knowledge to expand your business, you are entitled to claim deductions for expenses incurred during your trip. To claim deductions incurred during your overseas trip, you will need to produce written evidence of the expenses.

Those who have little to no knowledge of how deductions can be claimed for overseas trips can connect with the experts of KPG Taxation. Contact our tax return specialists in Australia today!

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