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Travelling Expenses Overseas

May 9, 2023

The Inland Revenue Department recently proposed updating tax deductibility of overseas travel expenses. 

The cost of meals are excluded if you are self employed. This is because Inland Revenue has separate rules to cover meals. 

Roughly, a self-employed person would have to eat anyway so should not be claiming the cost of their meals while away on business. The shareholder employee of a company is in the same situation as any other employee and meal costs while travelling away from home on business are tax deductible.

Here are some examples of how Inland Revenue sees the tax deductibility of travel expenses overseas.

Gertrude travels overseas primarily to go to a 50th wedding anniversary. However, she had to go overseas on business anyway so turns part of the trip into a business trip. She spends 11 days out of 42 on business and therefore claims this proportion of her airfares and accommodation.

Fred goes to Australia to buy stock. He is away for three days, one of which he spends visiting an old friend. He is entitled to claim two thirds of his travel costs.

Oscar buys an airline ticket to go to the United States on holiday. While he is there he takes the opportunity to visit potential clients and promote his business. At the time he bought the ticket his intention was just to have a holiday, so no tax deduction is permitted for the airfare but if he hired a car specifically for the business related activities that would be deductible.

In a 1984 court case, a qualified electrician and his wife were in partnership. They visited a factory in Australia for four days that made the electrical units on which the electrician was doing contract work. The electrician’s travel costs were tax-deductible. His wife’s costs were of a private nature and therefore not tax deductible.

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