Changes to travel deduction claims

10 Dec Changes to travel deduction claims

The Federal Government’s budgeted changes to claiming deductions for rental properties came into effect on 1 July 2017.

This means that travel expenses relating to inspecting, maintaining or collecting rent are no longer deductible. Note, it is only the travel portion of the expense that cannot be claimed, the actual task may still be a deduction. For example, repairs to the property may still be a deduction, but the cost of driving to the property to inspect the repairs is not.

Things you can’t claim

Non-deductible expenditures relating to travel are:

• motor vehicle expenses
• taxi or car hire costs
• airfares
• public transport costs
• any related meals or accommodation

You might be an excluded entity

However, some ownership entities have been excluded from this change. These entities may still be able to claim a travel deductions:

• a corporate tax entity
• a superannuation plan that IS NOT a SMSF
• a public unit trust (as per ITAA 1936 s 102P)
• a managed investment trust
• a partnership or unit trust if all of the members of the partnership or trust are entities included on this list.

So, basically, the institutional investors are still able to claim.

Carrying on a business

The changes in the travel deductions do not apply to entities that are “carrying on a business”. You should check with your accountant and the ATO to determine if the size and or nature of your portfolio meet the definition of ‘carrying on a business’.

As always with your financial management, getting accurate advice is essential.  Don’t assume you can no longer claim something, and don’t assume you can.