With Tax Time coming up, your clients may start to scratch about for some handy deductions. Well now you can tell your clients they can deduct the cost of travelling to see you.

A recently released tax determination spells out the circumstances where a taxpayer can make a claim for the costs of travel they incur where the purpose of the journey is to have their tax return prepared.

The Taxation Commissioner’s view, as stated in the tax determination (read it here), is that such costs should be deductible. One stipulation however is that the return must be prepared by a recognised tax adviser. The deduction comes under the heading of “managing tax affairs” in the relevant section of the legislation.

The costs included in allowable claims (that are involved with managing tax affairs) include accommodation, meals, public transport fares and even travel insurance.

Importantly, to the extent that some of the travel costs relate to another non-related purpose, the expenditure is expected to be apportioned. The Commissioner states that this is required to be done in a “reasonable” way, although whether of not a method of apportionment is reasonable or not will depend on the facts of each case. Only the costs that reasonably relate to managing tax affairs are deductible.

According to the determination, taxpayers should be able to demonstrate the reasonableness of the apportionment methodology used, including keeping any relevant evidence, to support the deduction claimed. Evidence could include calendar entries, car odometer records, taxi fare receipts, journals showing time spent at meetings with the tax agent and time spent on private activities.

The tax determination includes three examples, which work to explain the different circumstances where either the total cost of travel is deductible, or a portion of that expenditure.

The determination is discussed in the Tax Wrap podcast episode 119. Listen to it below.

A recently released tax determination spells out the circumstances where a taxpayer can make a claim for the costs of travel they incur where the purpose of the journey is to have their tax return prepared.

The Taxation Commissioner’s view, as stated in the tax determination (read it here), is that such costs should be deductible. One stipulation however is that the return must be prepared by a recognised tax adviser. The deduction comes under the heading of “managing tax affairs” in the relevant section of the legislation.