As the new tax season kicks off this July, the Australian Taxation Office (ATO) is intensifying its scrutiny of work-related expenses, explicitly targeting the rising trend of “bleisure” travel – the blending of business and leisure. Corporate Traveller, the renowned SME division of Flight Centre Travel Group (FCTG), in collaboration with financial manager and tax agent Moneywise, urges Australian business travellers to exercise heightened caution during the 2023/2024 tax filing period.

Increased ATO Scrutiny on Bleisure Travel

Corporate Traveller’s analysis reveals that Australian business travellers are significantly extending their trips, averaging six nights away, compared to the global average of just 3.5 nights. The data also indicates that January, September, and July are the peak months for bleisure travel, with January leading at an average of 7.2 nights.

Given this trend, Corporate Traveller anticipates that the ATO’s focus on ensuring that claimed work-related expenses are directly connected to income-generating activities will be particularly relevant for bleisure travellers.

Essential Guidance from Moneywise

Corporate Traveller and Moneywise provide critical guidance on navigating these stringent regulations. John Tuohy, Global General Manager at Moneywise, emphasizes the importance of careful preparation before filing taxes. “Most people don’t realize they have until 31 October to file their taxes for the 2024 financial year. Registering with a tax agent extends this deadline to mid-May 2025, offering more time to ensure accuracy,” advises Tuohy.

Tuohy stresses the complexities of Australian tax law, with over 14,000 pages of regulations. “It’s crucial to understand the nuances to avoid triggering an audit, especially with the ATO’s increased focus on work-related expenses this year.”

Strategic Tips for Bleisure Travellers

1. Maintain Detailed Records: It is essential to keep a meticulous travel and expense diary. This includes scanning receipts and summarizing expenses. Notes in a calendar tool detailing dates, times, and locations of work-related activities can suffice as a travel diary, substantiating specific expense claims.
2. Weekend Accommodation: Business trips extending from Friday to Monday can include deductible accommodation costs for Saturday and Sunday. However, expenses related to additional family members or leisure activities are non-deductible and should be carefully apportioned.
3. Legitimate Client Entertainment: Business-related client entertainment expenses, such as a golf outing, can be deductible if the primary purpose is business. Ensure these activities are directly tied to income-generating discussions or negotiations.
4. Day Travel Exclusions: The ATO does not permit tax deductions for day travel, including interstate trips unless associated with an overnight stay. Only specific expenses not reimbursed by employers should be claimed.
5. Avoid Double Dipping: Ensure out-of-pocket expenses reimbursed by the employer are not claimed again as deductions. However, daily travel allowances and mileage for personal vehicles used for work can be claimed.

Tom Walley’s Cautionary Advice

Tom Walley, Global Managing Director for Corporate Traveller, underscores the importance of careful documentation and compliance. “With robust business travel trends and reduced flight costs in 2024, the appetite for bleisure travel is set to grow. However, business travellers must be vigilant this tax season to avoid scrutiny,” warns Walley.

Walley highlights the significance of accurate and detailed record-keeping, especially for those planning leisure events like the Paris Games, which will impact next year’s tax reporting. “A proactive approach in managing tax obligations while travelling ensures compliance with Australian tax laws,” he adds.

Five Crucial Insights for Bleisure Travellers

John Tuohy outlines five vital insights for business travellers navigating the intricate tax regulations for work travel deductions in the context of bleisure:

1. No Tax Deduction for Holidays: A holiday is not a work trip. Blending work with leisure requires thorough documentation of work-related expenses to qualify for deductions.
2. Weekend Deductions: Business-related weekend accommodation can be deductible when necessary for Friday to Monday work requirements. Personal expenses, however, remain non-deductible.
3. Client Entertainment: Expenses for client entertainment are deductible only if directly related to business purposes. Ensure these expenses are well-documented and justified.
4. Day Travel Non-Deductible: Day travel expenses, even interstate, are not tax-deductible unless part of an overnight trip. Claim only unreimbursed specific expenditures.
5. No Double Dipping: Avoid claiming reimbursed expenses as deductions. Accurately report daily travel allowances and mileage for personal vehicles used for work.

Conclusion

As the ATO intensifies its focus on work-related expenses, bleisure travellers must exercise caution and maintain meticulous records. Corporate Traveller and Moneywise provide invaluable guidance to help navigate these complexities, ensuring compliance and avoiding audit triggers. By following these strategic tips, Australian business travellers can confidently manage their tax obligations while enjoying the benefits of bleisure travel.

Written by: Christine Nguyen

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