Claiming expenses on business trips – what’s tax deductible?
You can claim tax deductions for lots of daily expenses when you’re travelling for work. If you take a holiday as part of the same trip, you can only claim for the parts of the trip that were work-related.
In general, when you’re away from home you can claim for:
- taxis, or mileage if you use your own car for business travel
- meals and snacks.
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
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.