When it comes to business travel, your travel policy should cover booking protocols, domestic flight standards, daily meal allowances (per diems), travel expense reimbursement rules, and tax compliance guidelines aligned with the Australian Taxation Office (ATO) travel allowance guidelines and Fringe Benefits Tax (FBT) limits.
Your business travel policy must bring it all together.
While nearly three in four travel managers (74%) expanded their budgets this year, growth is slowing, with 68% expecting budget increases for 2026, according to Deloitte's Corporate Travel Study.
Key Takeaways
- Align travel expense reimbursements with ATO allowance rules to ensure tax compliance.
- Set clear flight class tiers and Lowest Logical Airfare rules to control travel spend.
- Maintain travel diaries for trips over six nights to avoid unnecessary FBT liabilities.
- Establish 24/7 emergency support protocols to fulfill Work Health and Safety duty of care
What is a Travel Policy (And Why Do You Need It)?
A travel policy is a formal set of rules for booking trips and managing expenses. It acts as a rulebook when you're traveling on behalf of the company. It covers flights, hotels, and food. It sets spending limits and budgets. And you need one because:
- Cost Leakage is Real: Unmanaged bookings, late fares, and inconsistent hotel choices can blow out travel budgets.
- Duty of Care is Non‑Negotiable: Under the Work Health and Safety Act 2011, employers must protect workers during any work‑related travel, not just at the office.
- ATO Scrutiny is Increasing: Without proper substantiation (receipts, travel diaries for more than six nights), allowances can become taxable or disallowed.
- FBT Can Sneak In: Certain travel benefits (e.g., extended trips, private components) may trigger FBT if not structured correctly.
Why Australia’s Growing USD 21.3 Billion Travel Market Demands Better Travel Policies
The Australian Travel and Tourism market is on a steady and long‑term growth path. According to data from IMARC Group, it’s expanding from USD 17.5 billion in 2025 to a projected USD 21.3 billion by 2034, compounding at a 2.07% CAGR.
As demand for flights and accommodation rises across the country, business travel costs are increasing alongside it. Without clear booking rules, preferred supplier tiers, and strict reimbursement caps, rising travel rates can quickly squeeze business margins.
5 Things to Include in Your Travel Policy
1. International and Foreign Travel
Because international travel involves higher costs, complex logistics, and elevated risks, your policy must clearly outline:
- Required pre-approval timelines for overseas trips.
- Passport, visa, and corporate travel insurance coverage.
- Guidelines on combining business travel with bleisure to ensure compliance with ATO FBT rules regarding private portions of trips.
- Travel diary requirements (mandatory under ATO guidelines for trips lasting six or more consecutive nights).
2. Business Class Flight Eligibility
Airfares represent one of the largest business travel expenditures. To balance employee wellbeing with budget constraints, establish clear parameters:
- Domestic flights: Default to economy class for standard short-haul routes.
- Long-haul flights: Specify threshold flight durations (e.g., direct flights exceeding 8 to 10 hours) or seniority levels where premium economy or business class is permissible.
- Lowest Logical Airfare (LLA): Require employees to select the most cost-effective fare within a reasonable window of their requested schedule.
3. Daily Meal Allowances (Per Diem)
Managing daily expenses requires caps to maintain tax efficiency.
- Align daily meal allowances with current ATO travel allowance guidelines, which break down reasonable amounts by salary tiers, destination cost zones, and meal types.
- Specify whether employees will receive a fixed daily per diem or submit actual receipts up to the ATO threshold.
- Clarify that alcohol is generally excluded from standard per diems or subject to strict limits to avoid FBT implications.
4. Executive Travel Standards
While senior leaders may require additional flexibility, executive travel should still operate within defined guardrails:
- Clear guidelines on upgraded accommodation standards (e.g., 4-star vs. 5-star hotels).
- Access to airport lounges and flexible or refundable ticket options for rapidly changing schedules.
- Rules regarding executive travel safety, such as leadership members traveling on separate flights.
5. Natural Disaster and Emergency Protocols
Duty of care is a legal requirement, which means emergency protocols should outline:
- 24/7 emergency support contact details and travel risk management procedures.
- Guidelines for severe weather events, bushfires, or flight cancellations.
- Immediate authorisation pathways for emergency accommodation or evacuation transport.
Frequently Asked Questions
Can employees keep frequent flyer points for business travel in Australia?
Yes, employees in Australia generally keep the personal frequent flyer points and status credits they earn from business travel.
When is pre-approval required for flights?
Pre-approval should be required for any booking that falls outside standard policy limits, such as last-minute bookings (< 72 hours), trips exceeding nightly accommodation caps, international itineraries, or routes requiring non-preferred airlines.
How far in advance should domestic flights be booked?
To secure lower fares on major domestic routes (e.g., Sydney, Melbourne, Brisbane), travel policies should require flights to be booked at least 14 to 21 days in advance whenever feasible.
Find Out Where Your Business Can Save on Travel Costs
As business travel becomes more and more unpredictable, your business travel policy should be practical enough to follow and flexible enough to handle last-minute bookings, cancellations, and emergencies.
Don't forget that if you're traveling for business, it’s important that you keep these policies updated and relevant.
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General information only. This article provides general information about business travel and does not constitute tax, financial, or legal advice. It does not take into account your personal or business circumstances. Tax laws and ATO guidance change regularly, and the information in this article is current only as at the date of publication. Before making any decisions, speak with a registered tax agent or qualified adviser about your situation. Empire Traveller is not a registered tax agent and accepts no liability for any loss arising from reliance on this content.
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