Do you know that you can take advantage of tax relief whenever you go on a business trip?
Yes, this is possible. So, if you are planning to communicate with a client through video conferencing, tell your secretary to cancel the meeting and book a flight instead, so you can conduct personal appointments. The rewards about travelling for this purpose includes free vacation airfare and lifetime experience. Most of all, you can lessen your expenses since you can obtain reimbursement and tax exemption (on payroll and income), especially if you arrange the trip for an employee. Moreover, out-of-pocket spending (e.g. hotel tips, accommodation, cab fare, and meals) are deductible.
Now, these are the benefits of domestic travel. How about if you are going to overseas destinations, can you reduce your expenses too? This is possible too. So, while you are comparing the rates of international flights, you should consider important policies such as:
One-week rule – You should plan a week (or less) business trip, counting from the day of your return and not on the remaining days.
25-percent rule – Transport fare and other business expenditures taken out of your pocket are completely deductible if the trip lasts over a week and only 25% or less of it is for leisure. To take advantage of this benefit, you should consider the days of departure and return as part of the business days. What is more, you must only travel to and from your destination. If you have incurred costs during your personal (non-business) days, you should know that these are not deductible.
On the other hand, your employee can obtain full deductions if he takes the trip on your behalf. This is possible if you take care of travel-allowance and reimbursement arrangements, he or she is not the managing director or related to you, and even without complying with the two rules mentioned above. Finally, base on a catch-all provision, there is a 100% reduction on the transportation expenses to overseas destinations given that your personnel is not considering personal holiday for the entire trip.
These are not the only aspects that you should know about tax breaks and travelling for business. If you want to obtain more insight, you can always enquire from the taxmen. Of course, take time to read the articles on this blog for basic knowledge on global entrepreneurship, especially if you are considering the idea of expanding your business internationally.
