At last, the holiday break is nearly here! Wouldn’t it be great for you and your significant other to take an overseas “business trip” and deduct the cost of the trip as a travel expense? Sorry, that’s unlikely to happen.
Perhaps you’re genuinely attending a conference, a trade show, or a senior management meeting.
Yes, it’s true that if the sole purpose of your overseas travel is business-related then any expenditure incurred is deductible for the business. You’ll need copies of invoices and receipts, of course, and it’s smart to keep an itinerary and a diary of what you did on the trip and when you did it.
Note, if your business trip is only within NZ then talk to us about the IRD rules on entertainment expenses. These rules are fairly wide, particularly in relation to food and drink, so your domestic business travel deductions may be limited to 50%.
Luckily, travelling overseas on business falls outside the entertainment tax regime, so is not limited by the 50% deduction rule.
However, the IRD has changed its view on when a spouse or companion’s travel expenses are deductible.
If you plan for your partner to attend functions in a support role, the Commissioner views this as private or domestic in nature and is therefore not deductible.
Their position now is that your companion must have a certain level of skill or expertise in the business’s income-earning activity before the travel expenditure can be deductible.