The Contractor's Guide to Accommodation Tax Deductions in Australia

The contractor whose work requires the overnight travel away from home incurs the accommodation expense whose tax treatment the ATO's rules determine based on the nature of the work, the distance from home, the duration of the travel, and the employment structure that distinguishes the employee whose employer funds the accommodation from the contractor whose business funds it and whose tax return claims the deduction that the business expense provides. This guide covers the general principles — consult your accountant for the application to your specific circumstances.

The General Principle

Accommodation expenses incurred in the course of earning assessable income are generally deductible where the travel is required by the work and the accommodation is away from the taxpayer's usual place of residence. The FIFO contractor whose roster takes them to the regional town for the work that the employment contract specifies incurs the accommodation expense that the work requires and that the tax deduction provides — subject to the substantiation requirements that the record-keeping must satisfy.

Substantiation

The tax invoice is the substantiation document — the receipt whose details include the provider's name and ABN, the date, the amount, the GST component, and the nature of the expense. The compliant tax invoice that the Travellers Group corporate account provides meets the substantiation standard. The handwritten receipt that the non-registered provider issues may not. Maintain the records: the tax invoices, the travel diary where required, the log that connects the accommodation expense to the income-earning activity that the deduction depends on.

The Self-Employed Contractor

The self-employed contractor whose ABN the business registration provides claims the accommodation as the business expense whose GST input-tax credit the BAS lodgement recovers and whose income-tax deduction the annual return claims. The compliant tax invoice's GST separation enables the input-tax credit. The non-compliant invoice without the GST detail prevents it. The corporate account with Travellers Group provides the invoicing standard that the tax compliance requires.