Far North Tax Professionals

Overseas travel expenses

Overseas travel expenses are business expenses in the right circumstances.  But there must be a clear connection between the expenses and the generation of revenue for your business.

A business purpose must be a dominant, not just incidental, reason for the travel.

If the overseas travel contains a holiday or time spent on personal matters, Inland Revenue will expect an apportionment of the costs.  Inland Revenue may request information to support a claim for the cost of the overseas travel.

We recommend that you keep a detailed diary.  For example, record daily movements, business contacts visited, business conducted, diversions from the business itinerary for private purposes, items of expenditure.  Keep business cards of people you meet.

The information recorded must be used to apportion the total expenditure between deductible travel expenses and non-deductible private expenses.  We usually base this calculation on the number of days of travel and the number of days applying to business.

Inland Revenue sometimes allows the full cost of an airfare.  For this to occur, the holiday element must be clearly minor and incidental to the business purpose.

Taking a holiday alongside a business trip usually indicates a dual purpose.  If this occurs, the cost of the airfare should be split as there are two clear elements to the expenditure.

 

Michael Goodchild

Far North Tax Professionals

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