What tax can Grey Nomads claim while on the road?

If you’re following your dream of living the grey nomad life, here are our top tax tips of what you can claim while on the road.

We understand that you’ve clocked off from the 9-to-5 while you’re chasing the sun, but don’t let your finances wander off the beaten track too. Whether you’ve retired, running your business part-time or gone all Gen-Z and sorted a side-hustle, you need to drive your tax in the right direction. Here’s what to look out for.

1. Where is your tax home?

You may have traded your base on the Sunshine Coast for a dusty campsite in Kalgoorlie, but the ATO still wants to know where your "tax home" is.

• This is generally your permanent address

• Usually, the one registered with Medicare or on the electoral roll

Tips:

• This matters if you plan on claiming business-related travel expenses

• Remember, documents and evidence to support your claim will be required

• Returning to your home regularly strengthens the case that your travel is temporary

• Ensure your postal address is also up to date with the banks and super funds

• Many grey or digital nomads use a trusted family member’s address or a professional mail forwarding service so that they don’t miss important correspondence while off-grid

2. Are you running a business while on the road?

The following scenarios are examples of running a business:

• You're making and selling handmade goods at local markets

• You’re offering freelance or consulting services in person or online

The ATO expects you to report income from these activities, even if they’re part-time.

Tips:

• Keep a logbook and written record of income and expenses. For example, if you drive from Buderim to Hervey Bay for a photography gig, that’s a business-related expense

• Using a mobile accounting app to scan receipts and track kilometres saves time and stores acceptable proof for the ATO.  Just remember that you may need to keep records for up to 5 years, so you'll need to ensure that you will continue to have access to the data for this period of time

3. What travel-related expenses can you claim?

If you’re earning income while travelling, some travel expenses may be deductible. However, you’ll need to be able to demonstrate a clear link to how this travel is related to earning that income.

Example:

Your fourbie is kitted out with beaut gear from your favourite outdoor retailer. They’re paying you to write a travel blog and produce videos showing their gear in action. You've kept a logbook, receipts and tracked your time related to your income-producing activities. You then claim the business-related portion of your costs like:

• Fuel and oil costs

• Vehicle depreciation

• Insurance and registration

• Campsite fees or short-term accommodation

• Mobile data and internet

• Content creation tools and software subscriptions

Proving the costs and business proportion is key! Your accountant is in the best position to guide you and keep you ATO compliant.

Of course, if you’re simply travelling for leisure and not earning, then travel expenses aren’t deductible.

 

4. What about superannuation contributions?

If you're still earning income and are under 75 years old, you may be able to make tax-deductible super contributions. Check your eligibility with your accountant.

Tips:

• Consider both concessional and non-concessional contributions

• Have you sold a property or downsized before heading off?  Then the downsizer contribution scheme could allow you to put up to $300,000 (per person) into your super without it counting toward your contribution cap

• Concerned about how this may affect your overall financial position? Speak to your financial advisor for financial advice, and then your tax accountant can optimise your tax position when you share your financial strategy

5. Will extra income affect my Centrelink payments

Some grey nomads draw a pension or receive other Centrelink payments. Be aware that earning any extra income, even if this doesn’t happen regularly, can affect your entitlements because most Centrelink benefits are income-tested.

Tips:

• If your total taxable income (including Centrelink payments) exceeds the tax-free threshold, you may need to pay tax at the end of the financial year

• Check your tax status and the implications of potential income and business expense claims before taking on paid work

• Record and report income accurately and on time. Consider setting up a myGov account with linked services so you can easily update your details as they change

6. What tax can Grey Nomads claim on investment income

Just because you’re on the road doesn’t mean your investments don’t count for tax purposes. If you have shares, rental properties or term deposits, that income still needs to be declared.

Tips:

• You may be eligible for tax offsets like the Seniors and Pensioners Tax Offset (SAPTO)

• Remember to claim the expenses you incur in managing your investments, including financial advice and accounting fees

• While you’re looking for your next stop to explore and enjoy, don’t lose sight of the long-term tax implications. For example, if you’re using your home as an Airbnb while you travel, make sure you understand the implications for capital gains tax down the track

7. How can I save time recording information for tax

Nowadays it’s so easy for grey nomads to stay connected. A mobile phone, laptop and decent Wi-Fi set-up and you have a mobile office. But who wants to have to manage spreadsheets and wrestle with data while trying to enjoy a Bargara sunrise over the sea?  Use accounting and non-accounting apps to record data efficiently and retain ATO compliant documents.

Tips: 

• The free, official app from the ATO makes it easy for individuals and sole traders to track income, expenses, car trips, and store receipts

• You can take photos of your receipts and save financial documents with Apps like Hubdoc. No more saving paper documents. Hubdoc is free if you have a Xero subscription

• Other examples of subscription-based apps you may want to consider are Expensify and Shoeboxed.

• Again, please make sure that you continue to have access to these documents for 5 years to ensure that you can prove your claims in the event of an ATO review.

It’s easy to let admin slide when you’re living the dream on the road. But a little planning and consistency can ensure you’re prepared at tax time to claim everything you’re entitled to.

How can ABA Advice Beyond Accounting help

Are you a successful small business owner on the Sunshine Coast dreaming of stepping back from the tools but not stepping away from your business altogether? We can help you understand the tax implications of following this path. As well as providing practical business advice to support the effective financial management your business while you travel. Check out our accounting services and the packages we offer to see if we’d be a good fit to help you chase your dream.