Rental Property - Travel Expenses

Dated: October 2004

Under section 8-1 of the Income Tax Assessment Act 1997, a taxpayer is entitled to a deduction for any loss or outgoing to the extent that it is incurred in gaining or producing assessable income. However, when a taxpayer incurs travel expenses associated with rental properties, they need to take into account the purpose of the travel and the extent to which those expenses were relevant or incidental to their rental income-earning activities. They may need to apportion the total expenses incurred to reflect any private component of the travel.

COMMON ERRORS - Check that you are not:

assuming you’re automatically entitled to claim a deduction for two trips a year to inspect your rental property – you must actually incur the expense before you can claim a deduction. claiming multiple deductions for rental-related travel and other work-related travel using the cents per kilometre method. Under this method, the 5,000 kilometre limit per vehicle applies to the total number of business kilometres travelled. failing to apportion travel expenses to reflect a private purpose for travel, particularly where the property is not tenanted. incorrectly claiming for travel expenses incurred before purchasing a rental property or to inspect a property at settlement. This is not a deductible expense, nor does it form part of the cost base of the property. failing to keep adequate documentation to substantiate their travel expenses, such as diary entries and other evidence of expenses incurred. claiming the cost of travel to a holiday home when the home is not available for rent. This expense is private in nature and not deductible.