I recently did any technical presentation in Bangkok to a small grouping of family business people. Although the material, and chats afterwards, were enlightening, I was desperate to see some of this kind of great city.
A band of us went to the particular Skybar. It was extraordinary. The view was awesome. The people (except me needless to say) were dead set beautiful as well as the atmosphere was electric. I needed one night in this city and I desired to really experience that.
The guys with myself were also present within my seminar. The conversation moved around nonetheless it inevitably came back to be able to how our business tried to affect families that were branching offshore – and Asia specifically.
It then became my time and energy to buy a drink for your group.
A beer expense AUD $25. Ouch.
And there was clearly 16 of us current.
Anyway. My partner and i sucked it in and also bought a round. At no stage could We have done a runner around the group. Firstly it just isn’t cool and secondly it could have been the kiss of death for almost any fledgling relationship.
But the particular question hangs. Was that fair of me to be able to charge this cost to be able to my business? How can you make sure everybody will be equal? How do an individual balance up needs regarding different owners? Can I get yourself a tax deduction? And how will you keep receipts for this all stuff?
Enter the notion of a travel allowance. These things basically eliminate the need to keep invoices while travelling so come tax time your daily life managing a family business is a lot easier.
So what is any travel allowance?
It is a payment to pay the costs while staff is travelling overseas for work. Typically a travel allowance covers the expense of meals, incidentals and accommodation inside Australia but only the expense of meals and incidentals although overseas – and no need to be copied tax invoices.
You can pay any travel allowance to virtually any employee even if they cannot receive a salary. That is important in a family business as family are often working directors but usually do not receive a straight PAYGW wage.
How much is the particular travel allowance?
Each year the Duty Office issues guidelines concerning how much the allowance may be for a person. The existing allowance rates are at TD 2016/13 and a lot people find the costs relatively generous.
And the rates are staggered allowing for different levels of seniority inside the family business to become recognised.
The main gain
If you are paid a real travel allowance while travelling it is possible to claim a tax deduction for your same amount without preserving receipts to prove that.
This is important. Frequently people, especially family associates, will give up around the tax deduction as it really is simply “too hard”. Receipts is likewise lost and the receipts could be overseas so they are borderline useless in understanding everything you did a while again.
The word “bona fide” is very important. You have to have incurred expenditure in terms of your travel.
So in the event you chose to stay with a mates house for free in Sydney and you also did not pay a sent for your trip you cannot state a travel allowance.
Level of privacy
The other benefit of your travel allowance is that it gives a member of family a level of level of privacy. Sometimes in a household business the families details can be quite involved. Mums could be looking at every penny as well as the control could become stifling. So if a member of family spent a bit a lot of one evening – it really is good to know the allowance simply covers the cost and never having to “fess up” to kinds indiscretions.
An allowance just isn’t forced upon you
Simply because the Duty Office sets a maximum rate to get a travel allowance does not mean you have to pay this amount to employees within your family business. This can be a maximum rate. Your family business can choose simply how much to pay staff although travelling.
Of course the language “bona fide” means the payment must be realistic rather than a tax fiction. Paying your staff $6 per day for accommodation, meals and taxi fares just isn’t a bona fide permitting.
A travel allowance will not stop your legitimate duty claim
Of course there are numerous legitimate reasons why you might have incurred more while travelling compared to the amount set by the particular Tax Office.
In this case you just tally up the genuine costs incurred while travelling and you also claim these as any tax deduction – both personally or through your household business. The travel allowance is their to alleviate receipts. It does not necessarily stop you claiming reputable costs.
Are you venturing?
Most often the notion of travelling is quite basic. However where a person is going on an extended trip it could become confusing – at what stage is a person basically travelling through a city rather than living in a metropolis?
The Tax Office use a general directive that in case you are away from home at under 21 days – you might be travelling.
This is a guide needless to say and varies with regards to the facts. So if you might be say, a country sales agent inside the family business you could be away from home for a few months – but only slumbering two nights in one town at the same time.
Importantly – the thought of travel among family members can be a sensitive one. Petty jealousy can arise from relative to family member. Often travel is seen as a “perk” for working inside the family business by some plus a menial chore by other folks.
If you are inside the family business – jot down a policy on family and travelling. Make it clear who is able to and cannot and the cornerstone the decision is produced. If it is really being done because they’re family – own around it. Likewise if individuals travelling are doing so inside the family business simply to produce the family business fantastic – clearly articulate in which and discuss it on the list of family.