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How Travel Agencies Earn Money: A Complete Guide To Their Revenue Streams

Have you ever caught yourself wondering how travel agencies manage to stay afloat in this era of easy-peasy DIY trip planning? You’re not alone – it’s a question that has crossed my mind more times than I can count, especially after learning that travel agencies in the U.S. pulled in a whopping $17.3 billion in 2021! Like many of you, I was itching to peel back the curtain on this tenacious industry and get a glimpse at their revenue-generating magic tricks.

So buckle up and come along for the journey; our guide is your all-access pass to demystifying how these travel maestros keep their cash register singing.

Key Takeaways

• Travel agents get commissions from airlines, hotels, and other suppliers for bookings made for their clients. These commissions are a big part of how they earn money.
• Agencies also charge service fees for personalized itinerary planning and handle complex travel arrangements, adding another income source.
• Offering niche services like luxury eco – tourism or themed vacations allows travel agencies to attract specific types of travelers and create additional revenue opportunities.
• Big travel agencies use their size to negotiate better deals with suppliers and provide diverse services worldwide, helping them maximize profits.
• To increase earnings further, travel agents can promote exclusive deals on social media, network with local businesses for corporate arrangements, and consistently enhance their industry knowledge through training.

The Evolution of Travel Agencies

Travel agencies have evolved over time, from traditional storefronts to more modern and flexible home-based models. With the rise of online booking platforms, travel agents have had to adapt their business strategies to stay competitive in the industry.

A Brief History

I’ve seen the landscape of travel agencies transform over time. In their early days, these agencies operated as key gatekeepers between travelers and transportation providers like airlines and train companies.

They thrived on commissions from bookings, wielding exclusive access to reservation systems that were out of reach for the general public.

Over the years, travel agents have had to adapt quickly due to technological advancements. The internet burst onto the scene and suddenly, flight tickets and hotel rooms were just a click away for anyone with web access.

This revolution forced agencies to reevaluate their value propositions and dig deeper into personalized services where they still held an edge over digital platforms.

Shift in Business Models

Travel agencies have had to rethink their approach to stay competitive. In the past, they primarily earned from commissions on bookings for flights, hotels, and tours. Now, with the rise of online travel platforms and do-it-yourself booking options, traditional commission-based models don’t cut it anymore.

Agencies are turning towards more diverse business models that focus on value-added services. They’re charging service fees for personalized itinerary planning and leveraging relationships with providers to offer exclusive deals.

Some even create unique travel experiences that you can’t find elsewhere or cater to niche markets like luxury eco-tourism or adventure travel. By adapting in these ways, they keep their edge in a tech-driven market where travelers demand more control and customization.

Transition to Home-Based Agencies

Making the switch to home-based agencies marked a significant change in the travel industry. I traded my office for my living room, embracing flexibility and personalized service that clients love.

This move cut down on overhead costs dramatically, boosting profit margins without sacrificing quality. By leveraging technology and social media, I can connect with customers anywhere at any time.

Adapting quickly became crucial once I ditched the traditional storefront. Now, fostering relationships with clients and offering tailored experiences is at the core of what I do. It feels good to provide value that goes beyond just booking trips; from crafting unique itineraries to being there when plans go awry – nothing beats the personal touch I can give from my home setup.

Diversifying Income Streams

Diversifying income streams is essential for travel agencies to maximize their earnings and remain competitive in the industry. By offering a variety of services such as customized itineraries, niche travel packages, and corporate travel management, agents can tap into different market segments and revenue sources.

This not only increases their potential for earning commissions from airline and hotel bookings but also allows them to charge service fees or markups on specialized offerings. Moreover, exploring new sales strategies and partnerships with tour operators can further diversify income streams and create additional opportunities for generating profits.

In conclusion, diversifying income streams enables travel agencies to adapt to changing market demands and capitalize on various revenue sources beyond traditional booking commissions.

How Travel Agencies Make Money

Travel agencies make money through various revenue streams, including commissions from airlines and hotels, service fees, and custom itinerary services. To learn more about the different ways travel agents earn money, keep reading!

Breakdown of Revenue Streams

Travel agencies earn money through various revenue streams, including:

• Commission from Suppliers: Travel agents receive a commission from airlines, hotels, car rental companies, and other suppliers for bookings made on behalf of clients.
• Service Fees: They charge service fees for the time and expertise invested in creating customized itineraries and handling complex travel arrangements.
• Tour Packages: Selling pre-packaged tour deals gives them a margin on the price difference between what they pay the supplier and the package price sold to the client.
• Corporate Services: Business travel management generates income through negotiating corporate rates with suppliers and providing expense management solutions.
• Ancillary Products: Earning commissions from selling travel insurance, visa processing services, and other ancillary products adds to their revenue stream.
• Incentives and Bonuses: Some agents receive incentives or bonuses based on achieving sales targets set by suppliers or consortiums they are affiliated with.
• Group Booking Markups: Organizing group tours enables them to negotiate favorable rates with suppliers and earn markups on group bookings.

Corporate Travel Agencies

After understanding the revenue streams in travel agencies, corporate travel agencies stand out as a significant source of income. These agencies specialize in managing business-related travel for organizations.

They earn money through service fees charged to businesses for booking flights, accommodations, and other logistics required for corporate trips. Additionally, they often negotiate contracts with airlines and hotels to secure discounts or commissions on bookings made for their clients.

Moreover, corporate travel agencies can generate revenue from providing consultancy services that optimize their client’s travel spending through cost-saving measures like bulk purchasing deals and data analysis to identify better booking options.

Leisure Travel Agencies

Leisure travel agencies generate income through commissions on bookings, service fees, and markups on tour packages. They earn a percentage of the total cost when clients book flights, accommodation, or tours through them.

Additionally, travel agents may charge service fees for custom itineraries and specialized services such as destination weddings or adventure trips. Furthermore, leisure travel agencies often markup the price of tour packages provided by suppliers to achieve a profit margin.

By diversifying their revenue streams and offering niche services such as luxury travel experiences or themed vacations, these agencies can maximize their earnings in an increasingly competitive market.

Custom Itineraries and Niche Services

When creating custom itineraries and niche services, I focus on curating unique travel experiences tailored to each client’s preferences. By offering specialized packages such as adventure travel, culinary tours, or eco-friendly getaways, I can meet the specific needs of discerning travelers.

This personalized approach allows me to differentiate my services in a competitive market, attracting clients seeking exclusive and authentic experiences.

I leverage my expertise to craft bespoke itineraries that cater to niche interests like cultural immersion, luxury travel, or off-the-beaten-path destinations. By tapping into these specialized areas, I can provide added value and stand out from mass-market offerings.

Big Travel Agencies

Expanding beyond niche services, big travel agencies play a significant role in the industry. They often have a substantial market share and boast extensive networks with various suppliers such as airlines, hotels, and tour operators.

Scaling their operations to reach a broader audience, these agencies leverage their brand recognition to negotiate favorable terms with suppliers, which in turn impacts their revenue streams significantly.

By tapping into economies of scale and offering diverse services across different regions or continents, large travel agencies can maximize profits while providing comprehensive support to a wide array of clients.

Taking advantage of their size and resources, big travel agencies are able to offer competitive pricing on package deals due to wholesale buying power. Additionally, they can invest in cutting-edge technology solutions that streamline processes for both employees and customers – from booking platforms to customer management systems.

Maximizing Earnings as a Travel Agent

To maximize earnings as a travel agent, understanding the different types of travel agents and tips for increasing income are essential. Want to know more about how you can increase your revenue as a travel agent? Keep reading to learn all about it!

Different Types of Travel Agents

There are various types of travel agents, each specializing in different areas such as corporate travel, leisure travel, custom itineraries, and niche services. Corporate travel agents focus on providing business-related travel services such as booking flights and accommodations for employees attending conferences or meetings.

On the other hand, leisure travel agents cater to individuals seeking vacation packages, cruises, or adventure trips. Some agents specialize in creating customized itineraries tailored to clients’ specific needs and interests while others focus on niche services like destination weddings or eco-tourism.

Some big agencies offer a wide range of services; smaller home-based agencies often provide personalized attention to their clients by focusing on specific niches or customized offerings.

Tips for Increasing Income

To increase income as a travel agent, I suggest the following:

• Leverage social media to promote exclusive travel deals and engage with potential clients.
• Offer personalized services and carefully curated itineraries to attract high – paying clients.
• Network with local businesses to establish partnerships for corporate travel arrangements.
• Invest in ongoing training and education to stay updated on industry trends and destination knowledge.
• Implement a referral program to incentivize existing clients to recommend your services to others.

Understanding Commissions

As a travel agent, understanding commissions is essential for maximizing earnings. Commissions are the primary source of income for many travel agencies and agents. They are typically earned from booking flights, hotels, car rentals, and other travel services on behalf of clients.

These commissions can vary based on the travel provider and type of service booked. It’s crucial to have a clear understanding of commission structures offered by different suppliers in order to negotiate better deals and maximize profits.

Travel agents should also be aware of any incentives or bonuses offered by suppliers, as these can significantly boost earnings. Building strong relationships with preferred suppliers can lead to higher commission rates and exclusive offers for clients.

Creating Niche Services

As a travel agent, I develop niche services to cater to specific customer needs. This may involve creating specialized packages for unique destinations, such as eco-tourism adventures or culinary tours.

By offering niche services, I can differentiate my agency from competitors and attract clients seeking tailored experiences. Additionally, developing expertise in niche areas allows me to provide valuable insights and recommendations that set me apart as an industry expert.

My goal is to identify underserved markets and design custom itineraries that resonate with those audiences. This approach not only enhances customer satisfaction but also boosts my agency’s revenue potential through premium service fees and exclusive partnerships with niche suppliers.

In conclusion, travel agencies can generate income through various revenue streams, including commissions from bookings and service fees. They have adapted business models to diversify their earnings by offering custom itineraries and niche services.

Maximizing earnings as a travel agent involves understanding different types of agents and tips for increasing income. Overall, the profitability of travel agencies is dependent on their ability to adapt to changing market dynamics and offer unique value to clients.

1. How do travel agencies make money?

Travel agencies make money through commissions from airlines, hotels, car rental companies, and tour operators when they book travel services for clients.

2. Can I save money by booking directly instead of using a travel agency?

In some cases, you may find lower prices by booking directly; however, travel agencies often have access to special deals and can provide valuable expertise and support.

3. What are the different revenue streams for travel agencies?

Travel agencies earn revenue through commissions, service fees charged to clients, selling travel insurance or packages, and through partnerships with other businesses in the industry.

4. Do all travel agencies charge service fees?

Not all travel agencies charge service fees; it varies based on the agency’s business model and the complexity of the trip being planned.

5. How much commission do travel agents receive?

Commissions for travel agents vary but typically range between 10-15% of the total booking cost depending on the type of service booked.

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Travel Manager Salary in the United States

Travel Manager Salary

How much does a Travel Manager make in the United States? The average Travel Manager salary in the United States is $110,192 as of March 26, 2024, but the range typically falls between $91,296 and $127,307 . Salary ranges can vary widely depending on many important factors, including education , certifications, additional skills, the number of years you have spent in your profession. With more online, real-time compensation data than any other website, Salary.com helps you determine your exact pay target. 

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Job Description for Travel Manager

Travel Manager directs the operation of the company's travel services. Administers and monitors the travel policies, guidelines, and budget to deliver efficient travel arrangements. Being a Travel Manager prepares periodic budget and utilization reports. Provides guidance to employees about travel requirements including visa, medical, and special conditions. Additionally, Travel Manager may require a bachelor's degree. Typically reports to a manager or head of a unit/department. The Travel Manager manages subordinate staff in the day-to-day performance of their jobs. True first level manager. Ensures that project/department milestones/goals are met and adhering to approved budgets. Has full authority for personnel actions. To be a Travel Manager typically requires 5 years experience in the related area as an individual contributor. 1 - 3 years supervisory experience may be required. Extensive knowledge of the function and department processes. (Copyright 2024 Salary.com)... View full job description

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Travel Manager Pay Difference by Location

Travel Manager salary varies from city to city. Compared with national average salary of Travel Manager, the highest Travel Manager salary is in San Francisco, CA, where the Travel Manager salary is 25.0% above. The lowest Travel Manager salary is in Miami, FL, where the Travel Manager salary is 3.5% lower than national average salary.

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Skills associated with Travel Manager: Budget Administration , Travel & Expense Software , Travel Arrangement Software , Vendor Selection ... More

Recently searched related titles: Destination Manager , Global Travel Manager

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¹ Booking Holdings and Expedia Group did not take part in the survey provided by the source. Data came from the groups' public financial reports. ² Estimate. Figures refer to global gross sales of travel products. The source only included companies generating at least 100 million U.S. dollars in travel sales, with a minimum of 15 percent of the sales volume in the United States. The companies also had to be the agent of record on the transaction from a supplier's perspective.

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Statistics on " Travel companies "

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Industry overview

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Online travel agencies (OTAs)

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How Much Do Travel Agents Make? Travel Agent Salary 2024

There's a whoooole lot to consider when looking at how much travel agents make. Beyond the more obvious factors (like working hours or having more experience), here are a few things that impact a travel agent's income.

• Employee vs. Self-employed? The vast majority of leisure travel agents are now entrepreneurs (most of whom align with a host agency ). This is a change from the old-school days when most travel agents were storefront agency employees. Why does this matter? Because there are going to be a lot more factors that impact income for those who run their own business compared to employees who clock in and out of a 9 to 5.
• Travel Agent Niche: A corporate advisor will typically earn a higher salary than leisure/vacation travel agents. However, within the leisure sector, niche makes a big difference. Adventure and luxury travel, for example, earned higher averages than family and Disney travel in some of HAR's more recent research reports .
• Time Investment: Self employed travel advisors who set their own schedules work varied hours. Time investment also has a huge impact on earning potential.
• Industry Experience: Experience level also plays a large role in travel advisor income, with travel advisors typically making more as they get a foothold in the industry.

The thing with travel advisors in the 21st century is that there is no "norm." There are always more exceptions than rules, which is one of the great joys of becoming a travel agent. Organizations outside the industry that report on travel agent salaries are ill-equipped to offer a nuanced picture. The Bureau of Labor and Statistics , for example, doesn't include self-employed travel advisors in their data, only employees.

Here's the thing though. Being self employed is, by far, the most popular pathway to becoming a travel agent .

Organizations reporting on travel agent salaries outside the travel industry aren’t aware of the nuances of our field.

So that’s why we’re here! :)

As a company that focuses solely on travel advisors, we’ll break down some of those nuances so you can get a more accurate picture of travel agent salaries. We’re going to dig into some in-house data to break down travel agent salaries and earnings into digestible categories.

Here’s what you can expect:

• ALL travel agents (employees and self-employed: hosted and independent)
• Self-employed travel agents (includes hosted travel agents and independently accredited agents).
• Travel agent employees (advisors who get 'ye old W2, employed by a travel agency)
• Corporate travel advisor employees and corporate travel managers (employees who book corporate travel)

So take a seat. Pour a waterfall of melted butter on a mountain of popcorn and settle in!

How Much Do Travel Agents Make? All of 'Em.

Phocuswright's 2023 US Travel Agency Landscape offered a great overview of current travel advisor income. They offer a big picture look at how much all advisors earn based on experience.

Here's the key takeaways:

• Overall, 39% of advisors earned less than $25,000 per year. However, 80% of advisors in the lowest income bracket had been selling travel for two years or less.
• Experienced agents, typically earned $50,000+ annually and 25% of experienced travel agents earned $100,000+ annually.

In summary? Experience has a big impact on income! This is particularly true among travel advisors, where commissions are typically not paid until after a client travels or in the case of cruises, 30-60 days prior to departure.

But don't get discouraged if you're just starting out!

If you're becoming an independent/self-employed travel agent, it can take a hot minute to generate income. It takes time to develop a client base and build your brand. Not only that, but commissions from suppliers often don't land in your account until your client's trip is complete (which could be months out)!

Here's more details what income you can expect in the first few years when you start your own travel agency from home .

What does the Bureau of Labor and Statistics Say About Travel Agent Salaries?

The Bureau of Labor and Statistics (BLS) offers a somewhat different vantage point. While Phocuswright's number reflect primarily home-based independent advisors, BLS data predominantly profiles travel advisor employees.

The BLS data has shown a 26% increase in travel advisor salaries over the past decade. The graph below illustrates how it's increased over time.

The BLS’ latest numbers (2024) reported an average travel agent salary of $46,400 1 .

Here’s a few things to keep in mind about the BLS numbers:

• BLS only profiles employees. The BLS site sums it up here: “Estimates do not include self-employed workers.” When calculating annual incomes. We survey full-time and part-time self-employed travel agents in addition to employees.
• BLS only looks at full-time travel agents. Here's how they crunch their numbers, "Annual wages have been calculated by multiplying the hourly mean wage by a 'year-round, full-time' hours." 2

So we took a look at the BLS data, which you now know skews heavily towards employees and doesn’t reflect the true industry landscape where the majority of travel advisors are self-employed.

What does HAR's research say about how much ALL travel agents make?

The graph below offers a counterpoint to the BLS data. Host Agency Reviews' in-house survey profiled 95% of self-employed advisors and 5% of employees.

Here's a birds-eye view of average income when looking at self-employed AND employee income.

Our site helps travel agencies start and grow their travel agencies so our readers skew heavily toward entrepreneurs. There’s also another huge reason HAR’s survey data on travel agent salaries are different than what the BLS reports.

When homing in on experienced and full-time advisors, results from HAR’s 2023 survey clock in higher than the BLS number, with data indicating that full-time travel advisors earned a $56,632 a year on average.

Since it’s hard to get accurate numbers on how much a travel agent makes when we look at everyone—corporate/leisure, employee/self-employed—next up, we’ll take a detailed look at average travel agent salaries for:

• self-employed advisors,
• travel advisor employees,
• travel managers,
• and corporate travel advisors.

Gotta cover all our bases! 😀

How Much Do Travel Agents Make? Self-Employed Travel Agents

Self-employed travel advisors are those who run their own businesses (rather than work as an employee).

I’m going to throw some industry lingo at you now. Are you ready? The self-employed category contains two primary segments of advisors:

• Hosted advisors (those who use another agency’s accreditation number, called a host agency ) and
• Independently accredited travel advisors (those who have their own travel accreditation)

Here’s the big picture you need to know about self-employed advisors. Over time, the number of self-employed advisors has been growing exponentially, while the number of storefront travel agencies has decreased over time.

In particular, hosted advisors have become the leading path to bringing new talent to the travel agency distribution channel.

We write research reports on both the hosted and independently-accredited travel advisor segment. In our 2023 report, full-time hosted advisors with 3+ years of experience earned $60,146 on average and their independently-accredited counterparts earned $76,252.

Why the income drop for hosted advisors? We know a big factor that influences how much a travel agent makes is their experience level. Hosted advisors are more likely to be newer to the industry. The median years of experience for hosted advisors was 5 years , compared to 18 years for independent travel agents.

Owner Deductions (and how it impacts how much self-employed travel agents make)

I want to bring up one last thing that complicates things when it comes to self-employed travel agent salaries. Because why not? You've already read this far! 😊

When we're talking about income for self-employed agents, income/salary numbers can be artificially deflated.

Why? Three things:

• Business owners may not be reporting all of their income. Since cash transactions leave no paper trail for the IRS to follow, many small businesses won't report cash transactions and in not doing so, they lower the income/earnings they report to the government.
• Business owners get write-offs. I can write off my office. I can write off my work trips. I can write off my work phone and meals with colleagues where I discuss business. When I do that, it lowers what I report for my taxable income (ahem, salary) to the IRS. Not only that, but travel agents will vary WILDLY in terms of how much of their income they write off. (Take a look at what travel expenses you can (and can't) write off .)
• Salary and income are separate things for some business structures. Depending on the agency's business structure, the owner may pay themselves a salary (say $45k) but the income of the company may actually be much higher. All the IRS requires with these S Corp business structures is that the owner pays themselves a “reasonable” salary.

Learn about the different types of travel agency business structures here. So, keep those things in mind when you're looking at earning potential.

How Much Do Travel Agents Make? Travel Agent Employees Only

This section on employee travel agent salary is going to give you numbers that will be close to what you can expect if you get hired on at an agency. Travel agent employee salaries have less variance when compared to self-employed travel agents.

For the majority of travel advisor employees, income is not dependent on commissions alone. Here’s a look at the travel agent employee compensation structures.

The set salary of a travel agent employee offers stability not afforded to self-employed advisors. Additionally, employees also often receive benefits and are not subject to the added complexity and expense of paying business taxes .

When looking at travel advisor employees only, HAR’s salary data lands much closer to what the BLS reports. In HAR’s 2023 survey, full-time travel agent employees earned $50,115 .

Employee compensation models play a substantial role when it comes to how much a travel agent employee makes. The graph below takes a look at the average income of the three most common compensation models.

Lesson on that? If you're looking for an employee position at a travel agency, find one that pays salary, plus commission! 😀

How Much Do Travel Agents Make? Corporate Employees & Travel Managers

Corporate travel advisors.

Corporate travel advisors (those who book travel for corporations) typically earn more than those who sell leisure travel. Below offers a look at corporate advisor income compared to leisure advisor income (among FT advisors).

Do you have an interest in becoming a Corporate Travel Agent? You can sink your teeth into a few juicy tidbits of info here: 

• HAR’s article, Breaking into corporate travel
• Our podcast interview (below) with corporate agent Karen Hurlbut:

Travel Managers

Looking ahead on the corporate travel agent career trajectory, Travel Manager/Supervisory positions start with a much higher baseline. Business Travel News (BTN) report profiling Travel Managers/Supervisors' salary working for corporate entities as an in-house advisor (not working for a travel agency). The overall average for a corporate travel manager salary registered at $128,439.

Beyond Travel Agent Salaries, Why Advisors Love Their Jobs

We've looked at travel agent salaries from a whole bunch of different perspectives. You made it through the spinning, twirling madness of data acrobats. 

HAR’s research reports offer a ton of info on travel agent salaries. But ultimately, how much you make as a travel agent depends on a lot of factors, including:

• what type of advisor you are (corporate, leisure, employee, self-employed, etc.),
• what type of travel you sell,
• your experience level,
• hours worked,
• and all that other fun stuff!

While naming one number for a travel agent salary is impossible, there is one thing that is consistent among all the surveys: the majority of travel advisors are happy with their career choice. 

HAR’s 2023 Hosted Travel Advisor Survey indicated that 95% of advisors would choose to become a travel advisor again if given the choice.

Corporate travel managers taking BTN’s survey were a bit more lukewarm in response to income satisfaction. 48% of travel managers reported their earnings were equitable, 12% felt “well compensated,” and 41% felt their salary was “low for responsibilities.”

And here’s the thing to remember about being in the travel industry. It goes beyond dollars.

Many advisors report that the primary benefit of working in travel is rooted in a personal passion for travel and the ability to share their love of travel with others.

Additionally, advisors often have access to great travel experiences they may not otherwise via familiarization trips or travel advisor rates for those who reach sales thresholds or meet requirements. 

In general, positions in travel offer a lower salary than other industries. But here’s the kicker, occupations in other industries don't include travel benefits and working in travel !

Interested in Becoming an Advisor? Here’s Where to Start

This leads us to the question of what type of travel advisor career you’d like to pursue.

Do you want to become a self-employed travel advisor so you can have the creativity to book the type of travel you love and the flexibility to be your own boss? Or do you want the structure of 9-5 with benefits and the income security of a travel advisor employee?

Employees at a travel agency may have a salary cap if their compensation model is strictly hourly/salary (about 42% of employees), but for those who own their own business, the sky's the limit. Plus, it's hard to put a price on visiting beautiful places, touring the newest properties, and the freedom and flexibility to work anywhere that goes with owning your own home-based travel agency.

How do you decide what type of travel you want to sell? Do you want to do leisure or corporate? If you do leisure, which types of travel agent niches are the most lucrative? If you go the corporate route, how do you break into booking business travel ? 

💕 If you're thinking of joining the industry, here are a few resources you're gonna love: 💕

• Starting a travel agency from home article
• Free 15-page travel agency business plan template
• HAR's nifty course on how to start a travel agency! (free trial)

We’re here to help! If you have questions about what route to take or how to get started, give us a holler in the comments or reach out to us at [email protected] .

• https://www.bls.gov/oes/current/oes413041.htm ↩
• Source: https://www.bls.gov/oes/current/oes413041.htm ↩

About the Author

Steph grew up in the travel industry. She worked with thousands of agents in her role as a former host agency director before leaving in 2012 to start HAR. She's insatiably curious, loves her pups Fennec and Orion, and -- in case you haven't noticed -- is pretty quirky and free-spirited.

If you’re looking for Steph, she leaves a trace where ever she goes! You can find her on Facebook, Instagram, LinkedIn and Pinterest as 'iamstephly'. 🙂 She doesn't do TikTok as no one would ever see her again.

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The 2024 guide to corporate travel management

What is a travel management company, how do travel management companies work, is a travel management company the same thing as a travel management agency, 8 reasons why organizations use a corporate travel management company, 1. they increase efficiency, 2. they provide 24/7 assistance, 3. they offer concierge services to organize the important extras, 4. they deliver excellent duty of care solutions, 5. they deliver excellent duty of care solutions, 6.  they help businesses reduce travel costs, travelperk is the all-in-one business travel platform that saves you time and money., 7. they offer greater visibility through real-time travel reports, 8. they can integrate corporate travel policies for greater compliance, what's the difference between traditional tmcs and travelperk.

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How much do Travel Agents make? Commissionable rates and Revenue Streams

By: Marium Farooq

October 30, 2023

Table of Contents

How much do Travel Agents make? Commissionable rates and Revenue Streams 

The travel industry, much like the rest of the world, has undergone significant transformations in recent times. The pandemic has in some ways reshaped the travel landscape. With the evolving economy and the dynamic changes in travel trends, let’s dive into how travel agents earn their income, exploring the factors influencing their earnings, their diverse revenue sources, and the commission rates they receive per booking.

There’s no one-size-fits-all approach when it comes to understanding the earnings of travel agents. It depends greatly on the type of travel agent. So, let’s first dive into what a travel agent is and explore the different types of travel agents.

What is a Travel Agent?

A travel agent is like your travel planning partner. They help you plan, organize, and book their trips by connecting them with airlines, hotels, rental car services, and tour operators. These experts have extensive knowledge about various destinations, travel options, and industry trends, which they use to offer personalized recommendations to their clients. And while they may not be as common in North America as once before, there is a strong network of agents helping millions of travelers worldwide book their journeys.

Travel agents often use Global Distribution Systems (GDS) to access real-time information on flight availability and prices. Their main role is to guide clients through the complexities of travel. They listen to your preferences, budget, and what kind of experience you’re looking for, and then they create a customized travel plan that fits your needs. Additionally, they take care of tasks such as booking flights, accommodations, transportation, and activities, ensuring everything goes smoothly. They can also provide valuable insights on visa requirements, travel insurance, and local customs to help travellers make informed decisions and avoid potential problems.

Travel agencies usually earn a commission, a percentage of the overall cost consumers pay. This rate can vary depending on the product or service being sold, which means that booking through a travel agency may sometimes cost a bit more than booking directly with the suppliers.

Regarding the terminology, you might hear both “travel agent” and “travel advisor.” In 2018, the American Society of Travel Advisors (ASTA) rebranded from “travel agent” to “travel advisor” to emphasize that their role goes beyond simple transactions. In Canada, a similar shift was noted in 2019. However, both terms are used interchangeably in the industry, so don’t worry if you hear either one. The important thing is that these professionals are here to make your travel experience enjoyable and stress-free.

Types of Travel Agents

Understanding the various types of travel agents is essential to gain insight into their commission earnings and revenue sources.

Offline Travel Agency

Before the internet’s rise, travelers would physically visit a travel agency to plan their adventures. With the advent of technology and online travel agencies, offline agencies have faced challenges. Within this category, there’s a new model known as a retail travel agency. Retail agencies operate like traditional retailers, buying travel products from wholesalers and selling them directly to customers.  creating itineraries, finding deals, arranging transportation and accommodation, managing refunds and cancellations, and handling insurance, travel documents, and currency.

Online Travel Agency (OTAs)

Online travel agencies, often abbreviated as OTAs, are major players in the travel industry, offering a wide array of travel services directly to consumers. These services encompass airfare, accommodations, car rentals, and vacation packages. For many tours and attractions, including Online Travel Agencies (OTAs) in their distribution strategy is crucial.

OTAs have emerged as the fastest-growing distribution channel for tours and activities, and they wield considerable booking influence, mainly owing to their substantial scale. Expedia, for instance, draws a s taggering 112 million monthly visitors across its network of travel websites. The success of OTAs highlights the significance of offering personalized services in today’s business landscape.

Online Travel Agencies OTAs  typically generate revenue by collecting a commission, which is a portion of the total booking expenditure incurred by the hotel. These commission rates can fluctuate depending on the specific OTA, typically falling within the range of 20% to 35%. Furthermore, certain OTAs also apply commission fees to additional services or amenities like breakfast or parking, which can result in an additional percentage increase.  

Wholesale Travel Agency

Wholesale travel agencies play a pivotal role in the complex travel distribution channel. They purchase travel products in bulk from airlines, hoteliers, and transportation companies and then sell them to retail travel agencies. These wholesalers are experts in planning, organizing, marketing, and creating holiday packages based on traveler preferences. 

Business Travel Agency

Business travel agencies, or travel management companies (TMCs), specialize in managing corporate travel. They offer several advantages over OTAs, such as expertise in business travel, quick booking, discounted airfare and hotel rates, 24/7 on-trip support, and crisis management. Business Travel agents excel at simplifying travel planning, reducing the time spent on research and reservations. They also assist business travelers in discovering accommodations and experiences that they might not be able to find on their own. 

Leisure Travel Agency

Leisure travel agencies focus on selling holiday packages to individuals seeking a break from their routine lives. These agencies provide customized packages, itinerary planning, accommodation booking, and guided tours tailored to customers’ preferences. Understanding the unique needs of leisure tourists is something that they excel at. 

Niche Travel Agency

The modern traveler seeks experiential journeys, leading to the rise of niche travel agencies. These agencies offer specialized tourism products designed for niche interests, such as ecotourism, agritourism, cultural tourism, health and wellness tourism, and cruise tourism. By catering to specialized customer needs, niche travel agencies have achieved remarkable success. 

Revenue Streams for Travel Agents

Travel agents can have various revenue streams, but their main earnings come from the careful planning and booking of different aspects of a trip for their customers. This can include booking airline tickets, arranging car rentals, reserving hotel accommodations, and coordinating tours and activities, all customized to meet the specific requirements of either an individual client or a larger group. Here are some of the ways Travel Agents make money:

Commissions 

Now that we’ve explored the landscape of travel agents, let’s unlock the secrets of their income. The primary source of income for travel agents is commissions. These commissions can vary widely, ranging from 5% to 30% , depending on factors like the type of booking, the elements involved in the travel package, and the vendor with whom they are affiliated. Besides commissions, travel agents can generate revenue through service fees. These fees can be charged for a range of services, such as planning, itinerary building, or even providing consultations.

Service Fees

Many travel agents have their own distinctive approach to service fees. These fees can take various forms, making each travel agent’s pricing structure unique. For instance, an agent might have a flat service fee that applies to all trips, and this fee can range from $150 to $300 or even more, depending on the agent’s practices. Alternatively, some travel agents may offer a separate fee exclusively for helping clients with travel planning.

Another interesting aspect is that travel agents can opt to provide planning and itinerary building services without handling the actual booking. In such cases, they may charge a fixed “planning” fee and once they’ve crafted the travel plans, their involvement ends. This approach offers a distinctive take on how travel agents serve their clients.

Revenue Stream from Add-Ons

Travel agents commonly have an additional revenue stream from the add-ons they offer once a trip has been confirmed. These may include items like travel insurance, private transfers, concierge travel services, cancel-for-any-reason coverage, and other offerings that yield profitable margins for the agent. Typically, these services involve upfront commissions and fees, significantly increasing the overall profit generated from the booking. For many travel agents, the sale of add-ons, such as travel insurance, constitutes a substantial portion of their revenue. This not only provides attractive commission rates but also fulfills a crucial need for travelers.

Marketing Fee from Supplier Listings

Promoting Supplier listings is another avenue that travel agents leverage. Businesses within the travel industry, including transportation companies, hotels, and rental companies, pay to have their services prominently featured on a host agency’s website. This prominent placement draws the attention of potential customers to these premium services. In return for this promotion, the travel agent  receives a payment from vendors for the promotional service.

Niche Travel Services

The most profitable model for an online travel agency is one that focuses on customer experience.Travel agents have the ability to create unique, tailored experiences for specific occasions, such as special needs travel, destination weddings, and sports travel. By designing travel packages for niche groups, such as corporations or interest-based organizations, travel agents can significantly boost their profits. Crafting these specialized packages involves ensuring seamless corporate travel experiences and promptly addressing any issues. Travel agents can harm their reputation if these aspects are not managed effectively. 

How Much Do Travel Agents Make Per Booking? 

Travel agents’ commissions vary based on factors like the booking type, travel elements, and the vendor they work with. Commissions can range from as low as  5% to as high as 30% . For instance, if a travel agent earns a 10% commission on a $2,000 booking, they would make $200. However, if the booking is complex, involves multiple countries, and the agent charges a service fee of $200, their total income from that booking would be $400.

Do Travel Agents Get Paid Hourly? 

Yes, travel agents can receive hourly pay, especially if they work for larger agencies. Hourly pay for travel agents in the United States averages around $23 per hour , reaching as high as  $30.82 per hour . However, travel agents are often compensated through other means, such as salary or commissions.

The income of a travel agent depends on their location, partnerships, and agreements. In this highly competitive industry, success comes to those who invest effort, energy, and passion into their work. Whether you’re a leisure travel agency owner, a business travel agency owner, or you specialize in niche travel, the key to growth lies in making the booking and travel process as seamless as possible for your clients. Understanding and catering to the specific needs of your customer base is essential in any industry, including the travel business.

In conclusion, travel agents play a crucial role in making travel dreams come true for their clients. While the industry has seen its fair share of challenges, travel agents continue to thrive by adapting to changing trends, exploring new revenue streams, and providing exceptional service. Travel is more than just booking flights and hotels; it’s about creating unforgettable experiences. 

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What Does a Travel Management Company do?

A travel management company (TMC) is a travel agency that provides extensive business travel support to organizations of all sizes. A TMC can simplify your workload, help you manage travel risks, reduce travel spend, serve your travelers, and provide integrated and centralized data reporting.

1. Simplifies and Streamlines Your Workload

Corporate travel management is complex. As a travel manager, you are often juggling a lot of different tasks within your company. Trying to keep track of employee travel preferences, travel plans, unused tickets, and more can be a daunting task. Travel management companies streamline your processes and support your business travel program through service and technology.

Christopherson Business Travel understands that technology is key to simplifying your workload. That’s why we built our AirPortal software platform. AirPortal provides customized dashboards for both travel managers and travelers with access to all the tools each stakeholder needs to manage the travel program and their business travel, respectively. This suite of tools within AirPortal streamlines the ability to manage risk, spend, profiles, travel plans, unused tickets, booking options, and more.

Each traveler is able to create a unique profile within our travel management platform that securely stores their travel preferences and loyalty program information. These profile details are fully integrated to ensure ease and convenience at the time of booking. When working with a TMC, travelers are able to book travel online or with an expert travel agent, based on your unique service needs. Your company travel policy is also custom-built and integrated to ensure all bookings are compliant.

AirPortal uses artificial intelligence to show the user what’s most important. On both the travel manager and traveler dashboards, AirPortal provides My Action Items, a feature that lists pressing or time-sensitive tasks and reminders so you always know what’s most important today. For example, if a traveler books their flight and rental car, but not a hotel reservation, a line will populate in their My Action Items alerting them of this gap in their travel plans. Or maybe a travel manager missed a travel approval request. This too will appear in the My Action Items feature of their dashboard, along with any other pressing tasks.

Some travel management companies like Christopherson also integrate their travel management software directly into valuable benchmarking tools, preferred booking tools, and your HR feed. Facilitating these integrations allows you to access everything you need from one centralized location, saving travelers and travel managers time, and ultimately money.

Providing guidance through account management is another way a travel management company can streamline and focus your travel program toward reaching your goals. Account managers should work with you to carefully analyze your program to see where you’re succeeding and where the gaps are. Based on that analysis, they should then provide a custom travel management plan to help you know where improvements can be made. This kind of consultative account management allows travel managers to lean on the expertise of seasoned industry professionals

2. Helps You Manage Risk

Duty of Care is the legal and moral responsibility each organization has to keep its employees safe from threats. Such threats could include extreme weather or natural disasters, political strikes and civil unrest, car accidents, theft, personal attacks, or terrorism—the list goes on. As a travel manager, how do you maintain confidence that you are upholding your obligation to protect and care for your travelers?

A travel management company can help expedite your knowledge of threatening situations in areas where you have travelers and facilitate your response and/or assistance. At Christopherson Business Travel, our clients utilize our SecurityLogic tool to access critical, real-time security data, quickly locate travelers and verify traveler safety.

In a recent study, only half of the travel managers surveyed felt confident that they could locate their travelers within two hours of an emergency. If your travelers’ plans are not stored, managed, or accessible from one centralized location, trying to locate employees during a crisis could be a messy and stressful task, not to mention potentially disastrous.

SecurityLogic provides travel managers with a real-time list of who is currently traveling and where those travelers are. SecurityLogic also allows you to quickly see if your travelers are in or are going to be in an affected area.

Travel alerts inform you of events that could impact employee travel or compromise their safety. Travel managers have the option to click through to the news source to get even more information. For extra security, you can set up auto-alerts that push directly to travelers via text and email to verify safety.

Click here to see a quick video tutorial on SecurityLogic.

3. Reduces Your Travel Costs

Partnering with a corporate travel management company can significantly reduce your overall travel costs. TMCs have expert knowledge in all aspects of the travel industry, including contract negotiations. Your account manager should be able to negotiate with your preferred vendors to ensure you are paying the lowest amount possible.

Business travel plans often change or get canceled. Did you know that nearly 10% of all business travel airline tickets go unused? As a travel manager, how do you ensure those funds from unused airline tickets are used before they expire? Keeping track of all the changes in your traveler’s plans could be a fulltime job in and of itself.

Travel Management Companies should ensure your unused tickets don’t impact your bottom line. Christopherson’s AirBank tool, found within AirPortal, captures those unused airline tickets and prevents the loss of those funds by prompting their reuse at the time of booking, whether online or with a full-service advisor.

Working with a business travel agency also ensures employees are booking within your company travel policy. By booking within policy, you can take advantage of your corporate rates, ensure you aren’t overspending, and make expense tracking and reporting a breeze.

Lastly, by partnering with a TMC you are saving time. Every hour you do not have to spend dealing with a travel headache, is an hour you can utilize elsewhere. Travel managers shouldn’t have to troubleshoot flight delays, manually keep track of itineraries, or pull reports from multiple locations. Travelers can find information quicker, make last-minute updates to travel plans, access 24/7 support from a trusted travel expert, and locate all expense receipts in one location.

4. Serves Your Travelers

Companies rely on corporate travel to close new business, foster relationships with current accounts, or inspire and connect departments within their own organization. In order to ensure those travel dollars are well spent, businesses need to prioritize the traveler experience to avoid fatigue and travel burnout. This is where a travel management company can shine.

By utilizing a tool like AirPortal, travelers can access all their travel plans in one location. No more frustrated inbox searching! Travelers are also alerted when they have incomplete trip plans. This allows you to avoid the high-stress situation of arriving at a new destination and realizing you forgot to book a hotel. Avoiding these small hiccups makes for a better traveler experience overall.

Let’s dive deeper into the actual booking process. Whether your travelers like to book online themselves or with a travel agent, partnering with the right travel management company can provide huge upside.

First, adhering to company travel policy is effortless. Regardless of which booking option they choose, your travelers are only offered options that fit within your policy. Traveler preferences are also documented, integrated, and considered before any bookings are confirmed, which makes for happy travelers!

Most importantly, TMCs should offer around-the-clock expert support and consultation. We all know that flights are sometimes delayed or canceled. Occasionally hotels are overbooked. Having access to a dedicated travel advisor team or a certified online support team means your travelers can feel confident in knowing they always have a trusted expert to turn to.

High-stress circumstances during business travel can lead to traveler anger and resentment towards their employer. These situations need to be solved quickly and with little effort from the traveler. With Christopherson Business Travel, your travelers have an expert in their corner to deal with unforeseen issues no matter the day or time.

5. Provides Integrated and Centralized Data Reporting

Next, let’s dig into how a travel management company can help the travel manager as well as the finance department. Many businesses struggle to analyze data because this information is coming from multiple departments and software. Christopherson’s AirPortal platform takes all your data points and presents them in a meaningful and centralized way.

Your AirPortal reporting and analytics tools can help you identify which departments or individuals spend the most on travel, which travelers book outside of your policy, and trends to see where you can save money. Having clear, concise reporting ensures accountability across all departments and helps you to make better-informed business decisions.

In addition to AirPortal’s benchmarking and analytics options, you can also access ValueLogic, an ROI tool that allows you to see exactly how and where we’re saving you money. And since not all travel programs are the same, AirPortal’s reports can be customized to your specific needs, so you see what matters to you. The end result? Cost savings and a well-managed travel program.

READ OUR BLOG POST, “ WHAT ARE THE BENEFITS OF A CORPORATE TRAVEL MANAGEMENT COMPANY? ” TO LEARN ABOUT MORE BENEFITS A TMC CAN PROVIDE.

Do you need a travel management company  .

From Fortune 500 companies to nonprofits to start-ups, any organization that wants to save time or money on travel can benefit from using a TMC. Download our whitepaper “Do I Need A Travel Management Company?” to better understand how your travel program could benefit from a TMC.

Connect with our team of experienced travel experts to learn how Christopherson can help your business travel with ease.

There's more to learn.

We’ve curated some articles to keep you updated on all things Christopherson Business Travel.

Revenue Management Explained For Travel Industry Operators

• Sales & Bookings
• Gain competitive advantages

As a travel business, practicing careful revenue management tactics can help you hit your financial targets and be profitable. 

You might think this strategy is best applied to hotels and airlines. But, the truth is, many travel industry organizations, including tour operators, can use revenue management to maximize their profits and business growth. 

To help you better understand revenue performance and how to apply it to your operation, we’ve put together a quick guide. 

In the guide, we’ve included some expert insights from Kate Burda. Kate recently joined WeTravel for a   webinar that covered creating demand for your tours in today's economy. She is the CEO & Founder of Kate Burda & Co , which specializes in revenue management and marketing for the luxury hospitality industry.

What Is Revenue Management In The Travel Industry?

Revenue management is all about using data to understand your clients’ behavior . In doing so, you can optimize your products and prices to match the demand better. The aim is to accelerate your sales and maximize growth.

A good example of revenue management in the travel industry is fluctuating flight prices. The prices change based on travelers’ search behavior and flight demand to display the optimal fare most likely to win bookings at that exact moment. 

This strategy isn’t just suitable for airlines and large hotels, though. Any tour operator or business that offers inventory that expires or has a fixed capacity can benefit from dynamic pricing. By pitching your product at the right price and right time, your market is better primed to receive it.

To apply revenue management to your travel business, you need to have a system to collect and interpret consumer data. This is central to being able to generate insights and improve your forecasting.

As a result, you’ll be able to make smarter decisions around your pricing strategy. 

Why Is Revenue Management Important For Your Business?

Meet demand in today’s market.

Why implement this pricing strategy into your business? That’s because if you apply it correctly, it’s a bridge to better meet your clients in today’s economy. 

The 2020 global pandemic completely changed tourism and the customer buying journey . A major learning point from everything is that we now need to show up in front of our customers differently.

This includes shaping sales, marketing, and pricing modeling so that there’s no disparity between what you want to achieve and how you’re doing it.  

In today’s climate, where COVID-19 is still impacting regions at different rates, it will be critical to be flexible and conscious of tourism demand. 

Achieve A Better Financial Outcome

One of the main reasons to focus on revenue management is to help your business achieve its end-goal revenue strategy. 

Kate shared some surprising stats during the webinar: as many as 90% of organizations fail to execute their revenue strategies, while 61% of organizations don’t have strategies in place that link to their financial outcomes. 

Kate suggests that businesses can do more to think about what they’re trying to achieve and how their strategy ties to this. Being busy is not always enough to have a meaningful impact on your financial outcome. Instead, you should focus on bridging the gap between financial vision and execution.

Become More Customer-Centric

By diving into your business’s revenue performance, you take on a more customer-centric way of thinking. This is because you gain a far deeper understanding of their behaviors. You can then put their demands first when marketing, selling, and pricing your products.

Identify Gaps In The Market

Revenue management encourages flexibility, which can help you identify new gaps in the market. 

Say you’re a tour operator and you decide to lower your prices during the quiet winter season. All of a sudden, you might discover a new influx of locals interested in your winter tours. Now you can open up your business to serve that market, giving you new avenues to explore in the industry.

Three Top Revenue Management Strategies To Focus On In Today’s Economy

1. target the right customer segments.

One of the first steps to creating an effective revenue management strategy is understanding your different customer segments. Not all of your customers are the same. And not all segments will grow at the same rate or have the same opportunities available. 

To do this, Kate suggests peeling away the products. Really get to know your different audiences and their behaviors, then work out which segments are primed to get you to your revenue goals. 

You don’t need to target and optimize your strategy to suit all client segments. Just focus on core customers that will help you achieve your end goal.

2. Show Up Early In The Customer Journey With Marketing

Before the pandemic, travel demand was high. So, businesses could ride that wave and show up when travelers were validating their decisions or making a purchase. 

Now, you need to show up with marketing before the traveler even knows what they want. Before price becomes one of the drivers and they weigh you up against competitors.

How do you capture them there? You own their mindset. If you understand their mindset, help them with insights, share valuable information, and guide them to make a really great decision early on, you stand a chance to get a share of the wallet too. 

3. Stay Ahead Of Trends

Understanding what is happening in tourism today is key for forecasting demand. 

At the moment, the situation is unpredictable with COVID. Travel isn’t as easy as it used to be--there is still red tape around movement and how businesses can operate, changing from one location to the next.  

So, staying ahead of what is happening in a specific location can help you to more accurately identify where it’s safe to travel to and what activities will have the green light. In turn, you can adjust your strategy in a way that makes sense to the market and travelers. 

Careful revenue management can have a significant impact on the success of your travel business. Whether starting new or refreshing your offering, applying this strategy can help you move more intentionally into the market as we emerge from COVID-19.

If you would like to connect with Kate, you can find her on LinkedIn or email her directly at [email protected] .

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What is a TMC (Travel Management Company)?

June 19, 2019

by Rob Browne

Business travel is a trillion dollar industry. With all of the money that is spent on travel every year, it can be a lot for large companies to handle managing all of the trips that their employees take.

Enter the travel management company, or TMC, which can be hired to direct your company’s corporate travel needs.

What is a TMC?

A TMC, or travel management company, provides solutions for the travel needs of a business. It provides the ability to book travel with special rates, can be adjusted to a specific travel policy, and provides duty of care support for travelers.

TMC basics: how it functions, how much it costs & how to find the best one for your company

We’ll go over the basics of what a travel management company does for your company’s business travel , how much it costs, and how to find the TMC that best fits your company.

The role of a TMC in company travel

In managing a company’s travel needs via travel management tools , a TMC will be able to blend the specific travel policies of individual companies with the best available fares and rates on the market. It also can be used as a corporate compliance tool. There are four ways a TMC functions to manage corporate travel.

Enforces a corporate travel policy

Any company that has employees who travel for work needs to employ some kind of company-wide policy to ensure that employees comply with basic standards. These standards can include a specific fare class on flights, a star class for hotels, and a class of rental car.

A TMC helps enforce this policy through guiding travelers to options that are compliant. Often times, a TMC will only display options for travelers to book that are within their company policy. Using a TMC ensures that employees adhere to your company’s travel policy without having to spend extra time and effort to track travel compliance.

Provides systems on which to book travel

A TMC importantly provides both online and call-in systems in which employees can book travel. Online end-to-end booking is a necessity in 2019, especially because to eliminate hassle, booking business travel should be equivalent to booking any sort of personal travel outside of a TMC.

Where a TMC differs in how it provides systems for booking is that you can ensure that it is giving travelers the best rates possible. There are no hidden tricks or gamification strategies involved in booking with a TMC. It is a consistent, reliable platform on which your company receives the best rates regardless of when employees are booking.

Negotiates contracts with vendors for special rates

A key benefit of TMC use is that it can occasionally provide special corporate rates from hotel and car rental vendors for your business trips. These rates eliminate the need for extra work on the part of your travelers, as they have only one place to go for the best rates.

Any online travel site can offer a good sale once in a while, but using a TMC guarantees that you have certified travel professionals in your corner finding you the best options for your bookings.

Provides duty of care support

One of the biggest stressors for travel managers and those pegged with leading a travel program at a company is the safety and security of business travelers. TMCs contain duty of care features that provide real-time communication and information for the safety of travelers in new or unfamiliar destinations. Enlisting the help of a TMC takes the stress off of worrying about employees’ health and safety when they travel for work.

How much does a TMC cost?

TMCs can be priced either based on a fee per travel itinerary or on a monthly or yearly subscription basis. The exact cost will of course depend on the size and geographic scope of your company’s travel needs. TMCs charge fees just as airlines and hotels do when you book directly through them. You’ll also need to take into account that through the special rates they’re able to locate, TMCs find your travelers better fares on average than they would typically find themselves.

It’s hard to estimate an average cost of a TMC because of how dynamic the scopes of different travel programs could be in comparison to each other, but a rough estimate of the cost of a TMC per itinerary booked is $14. Whether you view the trade-offs of sometimes lower fares as valuable for your company is of course up to your discretion. However, most industry leaders suggest that the usefulness of using a TMC exceeds the hassle and potential wasted time and costs of managing your company’s travel autonomously.

Finding the right TMC

Selecting the right TMC for your business should begin not with the TMC itself but your own individual travel policy. Setting out a clear travel policy ensures that the TMC you choose aligns with the exact needs of your company. You should also consider where most of your company’s travel is regionally and what kind of budget your employees have on these trips.

Your industry and size should also dictate the type of TMC you search for. If you are a large company that puts on events and will consistently be on the road, you’ll need a TMC equipped to secure a large number of bookings and adapt to sudden changes in itineraries.

A final key component to finding the right TMC is to make sure that they’re a good cultural fit for your company. They’ll be working closely with your employees and contributing to how their time is spent on the road. If your company values work-life balance or the ability for travelers to have flexible schedules when traveling, you’ll want a TMC that can deliver on that culture.

A live look at the G2 Grid® for this category shows the different travel management products available based on real-time, validated user reviews.

Travel management companies help your business book travel for employees, encourage employee compliance to your corporate travel policy, and ensure the safety and security of business travelers. Although they can come at a steep price, many corporate travel departments view the use of a TMC as worth the money for making sure that business travelers are booking reliable fares and conducting their business on the road in ways that reflect company culture.

Looking for more information on corporate travel? Check out the best travel management software .

Rob is a former content associate at G2. Originally from New Jersey, he previously worked at an NYC-based business travel startup. (he/him/his)

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15 February 2022

Corporate Travel Management - 1H22 Results

Ongoing earnings recovery and m&a execution drive first-half results.

Corporate Travel Management (CTM, ASX: CTD) reported underlying EBITDA of A$18.2m (1H21: -A$15.2m) and a strong revenue rebound in the first half of FY22, building momentum in spite of the impacts of the Delta and Omicron COVID-19 variants.

Group revenue and other income increased by 120% to A$163.0m for the first half of FY22, compared to the prior corresponding period and only 27% below pre-COVID revenue.

CTM also maintained its strong balance sheet with no debt and sufficient cash to manage through to full recovery.

While the Omicron COVID-19 variant reduced travel activity from November 2021 to January 2022, CTM currently expects a significant ramp up in activity in regions where travel restrictions are relaxed or removed.

The United Kingdom and North America are experiencing a rapid rebound in client activity in February 2022 as restrictions have been lifted. The Group also expects to benefit from a greater than normal seasonal weighting of corporate travel activity towards the second half of the financial year.

CEO North America, Kevin O’Malley said, “Revenue is back above pre-CTM COVID levels, which points to how effectively we have integrated the Travel & Transport acquisition and the potential of the consolidated business as the travel market fully recovers.

“Our revenue rebound shows that clients highly value our model of personalized service and proprietary technology because it helps them navigate the current complexities of the travel environment. This is translating into record new client wins and strong revenue momentum.”

North America expecting early return to pre-COVID profitability

CTM North America reported positive underlying EBITDA for the period and expects an early return to pre-COVID profitability on the back of synergies and market share gains after integrating Travel & Transport.

North America reported a 213% increase in revenue to A$92.0m for the six months to December 2021 (1H21: A$29.4m) with both TTV (1H22: A$949.0m) and revenue back above pre-CTM COVID levels.

North America led the Group in new client wins, demonstrating growing client support for CTM’s service proposition and technology offering.

With domestic travel restrictions removed in February and international restrictions expected to wind back in 4Q22, CTM expects improving profitability in North America as a result of three drivers.

• Increased penetration of Lightning online booking tool – Lightning creates efficiency gains, freeing up expert travel advisors to service complex travel itineraries. The software has achieved solid client acceptance with a number of new blue-chip US and global clients implementing Lightning.
• Integration benefits – CTM’s integration of a single client system will be completed in June 2022 and is expected to create efficiency benefits on a full recovery of travel activity that is significant and beyond initial expectations. Full integration will improve productivity and allow advisors to focus on providing greater value for clients, as well as unlocking further automation in proprietary agent tools.
• Market share gains driven by superior technology, service, and sales investment –The Group’s financial strength allows the business to continue investments in enhancing client and agent solutions. CTM has also established a dedicated team focusing on global clients, with three new clients totaling more than US$80m in annual TTV won in 2Q22.

While CTM has not offered FY22 profit guidance because of the uncertain short-term trading environment, the Group expects underlying EBITDA will continue to build in February and March 2022 as organizations in North America, UK/Europe, and Australia/New Zealand return to working in offices after the Omicron variant subsides and restrictions are removed.

The Group will continue to assess acquisition opportunities that support the global strategy to create more levers for long-term organic growth.

For further information

Media inquiries:

Alexa Perry Executive Director, Marketing [email protected] +1 301 941 0354

About Corporate Travel Management – click here

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The ultimate guide to corporate travel management

The days of businesses operating and growing within a small city radius are long gone. In today’s fast-paced and tech-savvy business world, companies have easy access to global talent and clientele.

As such, transporting stakeholders long distances is standard practice. Recent forecasts project that there will be more than 470 million domestic business trips taken in the US alone in 2024.

While corporate travel is a necessary part of operating a modern business, it can also be logistically difficult and costly to manage—especially as your business scales. This article will help cover what you need to know to improve your corporate travel management operations.

What is corporate travel management?

Corporate travel management is the process of coordinating, analyzing, and managing a company's business travel needs.

Effective corporate travel management is crucial for keeping business trips organized and efficient, ensuring that travel arrangements align with the company’s policies, helping to enhance the safety and comfort of travelers, and adhering to budgets.

What does a corporate travel manager do?

Craft and implement comprehensive corporate travel policies.

Corporate travel managers develop detailed travel policies that align with the company's unique goals and needs.

For example, a travel manager would establish policies for:

Booking procedures. Define processes for booking rides, flights, and hotels.

Travel class guidelines. Set standards for business or economy class based on distance, duration, or employee level.

Accommodation standards. Specify the type, budget, and class of accommodations allowed (for instance, hotels or home rentals).

Expense reporting and reimbursement. Set limits on daily allowances for meals and incidentals, and establish procedures for tracking and submitting travel expenses.

Technology use. Implement travel management software or apps to simplify travel arrangements, data analysis, and reporting.

Orchestrate seamless experiences

Corporate travel managers oversee the coordination and execution of business travel plans for employees. They either directly arrange all aspects of travel themselves, manage an internal team of travel coordinators, or work with third-party travel agents.

Today it’s also essential to adopt corporate travel apps , as they assist managers with streamlining travel plans across their organization. A corporate travel app helps with the following:

Automated expense tracking. Eliminates the need to save hard copies of receipts by automatically adding to the system the trips and meals to be expensed.

Centralized control from a dashboard. Provides complete visibility into travel policies, procedures, expenses, budgets, and plans.

Real-time reporting and tracking. Offers a comprehensive look into customized travel programs with real-time updates for travel, meals, incidentals, and more.

Simplified travel management. Includes flexible and customizable limits for booking rides, buying food, and processing payments (such as charging to a personal card for reimbursement or to a business card).

Control the budget for optimal financial outcomes

Travel managers navigate the line between providing comfortable travel experiences for employees and sticking to the business’s travel budget.

To do this, managers research cost-saving opportunities, identify the most cost-effective times to travel, and negotiate discounts with travel vendors.

A travel manager might, for instance, identify and book off-peak flights for a team attending an international conference. They could also track rideshare prices to find optimal travel times and book hotel rooms with corporate discounts.

Analyze data to inform future travel policies

Corporate travel managers are also responsible for monitoring travel data. Keeping a close eye on travel analytics helps with:

Tracking expenses. Examining corporate travel expenses reveals spending patterns and shows where the company can reduce costs.

Identifying travel patterns. Historical travel data helps managers find patterns and trends, which helps with forecasting future travel needs and preferences.

Benchmarking against industry standards. Travel managers compare their company’s travel spending and policies against industry benchmarks to better understand performance.

Analyzing supplier performance. Evaluating data about suppliers can uncover their reliability, service quality, and value.

Managers capture this data with feedback surveys from employees, travel industry reports, travel management software, and third-party travel platforms.

Prioritize duty of care for employee well-being

Corporate travel managers work closely with HR managers to develop duty-of-care protocols for their employees.

Duty of care in corporate travel includes:

Ensuring the health of employees. Maintaining the well-being and health of traveling employees and making sure they have access to necessary healthcare and support.

Providing for basic needs. Arranging for essential amenities like quality food and beverages, and comfortable accommodations.

Protecting employees. Keeping travelers away from situations where they may experience harassment, stress, or discrimination.

Collaborate with industry partners

Corporate travel managers’ duties don’t start and stop with coordinating and managing business travel. They’re also responsible for building relationships with top industry partners and vendors.

This includes establishing discount and comfort agreements with airlines, negotiating deals with hotel chains, and selecting the best rideshare apps.

They also work closely with internal teams and senior management to ensure that travel strategies and contracts align with overall business goals.

For travel policy setters or managers

Oversee your travel program with the flexible rules and streamlined reporting you need, with Uber for Business.

Challenges within corporate travel management

Successfully managing corporate travel requires so much more than simply booking plane tickets and hotel rooms for employees. Below are some of the top challenges corporate travel managers face.

Cost-benefit analysis

In corporate travel management, this involves quantifying all costs associated with travel and weighing them against the benefits, such as networking opportunities, employee development, client relationships, and successful sales.

Imagine a scenario where a company is considering sending an employee to an international conference that costs $3,000 in total. The corporate manager would need to research the potential benefits (such as networking, business development, and employee growth) of spending that $3,000 and determine if it’s worth it.

Cost-benefit analysis can also be nuanced. Consider this data point, for example: 48% of business travelers say their last work trip was too long. If an employee can accomplish what they need to in 2 days of travel and a manager books a trip for 4 days, it results in 2 extra days of employee time and corporate travel budget.

Cost-benefit analysis, in this instance, would involve analyzing past data, including post-travel feedback surveys, to understand how long employees need to travel to accomplish goals while optimizing the travel budget.

Traveler satisfaction

Research shows that 60% of employees say business travel positively affects their satisfaction with their job. And Slack’s 2023 “State of Work” report found that most employees say feeling happy and engaged at work is a key motivator. What’s more, when employees are happy and productive, businesses thrive, according to The Economist .

The tricky part for travel managers is accommodating employees’ diverse travel needs and preferences within a corporate (not a luxury vacay) budget.

To keep employees happy and productive, travel managers must understand what satisfies employees while they travel and then develop a plan to deliver a positive experience while working within a corporate budget.

Adapting to changing business needs

Shifts in business priorities, such as targeting new international markets or altering strategic partnerships, directly affect travel requirements.

A shift toward more in-person client meetings, for example, can increase travel frequency. Corporate travel managers must adapt policies and budgets to align with evolving business needs.

And efficient corporate travel management requires monitoring shifting political, economic, and health climates worldwide and being ready to respond and adapt. Travel needs can change in an instant, and corporate travel managers must remain adaptable to adjust travel strategies as necessary.

Environmental sustainability

A 2023 Deloitte study reported that climate concerns will likely limit corporate travel growth in the coming years. Deloitte found that “4 in 10 European companies and a third of US companies say they need to reduce travel per employee by more than 20% to meet their 2030 sustainability targets.”

This statistic highlights the growing pressure on corporate travel managers to devise travel strategies that meet the needs of a growing business while being efficient, cost-effective, and environmentally responsible.

4 tips for managing business travel

Now that we’ve discussed some of the job responsibilities and top challenges of corporate travel managers, let’s cover the best tips for managing business travel.

1. Establish clear communication channels

When employees don’t know your travel policies and procedures, it’s impossible for them to comply.

In other words, they might not know how much they can spend at a corporate dinner, whether they should take a taxi or use a rideshare app, or what safety and security policies they need to follow when traveling for business.

Consider establishing a clear communication channel where every employee can access critical travel information. This could be a dedicated travel portal or intranet page, regular email updates, or travel management software that provides real-time communication.

2. Conduct regular training sessions

Another way to fine-tune communication and increase awareness about travel policies is by conducting regular training sessions.

Create a live or digital training course that covers the following:

• Travel policies: Review company-specific travel guidelines and booking procedures.
• Safety measures: Explain all protocols and emergency procedures for travel. Draw special attention to areas people may be visiting that are undergoing political or civil unrest.
• Changes in procedures: Provide updates on any new or altered travel-related processes. This is especially important during health crises.
• Duty-of-care responsibilities: Educate on and provide clear definitions of the company’s commitment to traveler safety and well-being.
• Per diem amounts: Outline the daily allowances for expenses while traveling. Include a definition of what is and isn’t allowed. For example, is alcohol part of a per diem or excluded from corporate expenses?
• Expense reporting: Give instructions on how to accurately report and submit travel expenses.

3. Adopt travel technology

When you’re managing travel for multiple employees across different offices, it’s challenging to educate everyone, track expenses, and ensure compliance with travel policies. To organize and streamline everything, you may consider a travel management system (TMS).

A TMS is a comprehensive travel platform that helps companies book, track, and report travel activities. It typically also provides real-time data and analytics, helping you monitor travel spending and optimize your travel strategies.

4. Evaluate and update travel procedures and policies

Any changes in technology, the world economy, political climates, global health status, and industry have a profound effect on business travel.

As such, it’s essential to establish a process for continually evaluating and updating travel procedures and policies.

This could include:

• Reviewing policies to make sure they’re relevant, cost-efficient, effective, and safe
• Surveying your employees to see how happy they are with your travel policies
• Evaluating your TMS data to identify where you can optimize travel, innovate, and improve processes

Move your business forward with Uber for Business

In today’s fast-paced business world, getting corporate travel right is more important than ever. Adapting to changes quickly and embracing new technologies are key to staying ahead in managing business trips effectively.

You may also consider leveraging Uber for Business , a game changer in managing your company’s travel needs. It simplifies the entire process of corporate travel management with features like automated expense tracking and centralized control, making it easier to stick to policies and budgets.

With Uber for Business, you’re not simply organizing travel. You’re also saving time and money while giving your team a smoother, more efficient travel experience. Learn how to get started .

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Get the best of Uber, for business—including improved cost controls and compliance.

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Save time with automatic expense reconciliation

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All the advantages of Uber your employees already love, for business.

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It all starts here - manage travel and meal programs with easy to set cost controls and more.

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Help your employees connect with your company’s Uber for Business account.

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Travel and Expense Management: Definition, Significance, Benefits, Key Features & Best Practices

Stay updated, see darwinbox in action.

Travel and expense (T&E) management is a crucial task for any business. It is, however, a complex process to accurately gather and record all travel-related expenses. This article explains how to optimize business travel spending, stay compliant, reduce policy violations, and enhance the efficiency of your T&E process.  

Whether you have 50 or 5,000 employees traveling for business, travel and expense (T&E) management is an important task. It was, until recently, a cumbersome and long-drawn process.  

Fortunately, things have improved in recent years. The necessity for physical expenditure reports, human reimbursement systems, and back-and-forth approvals has been eliminated by cutting-edge technologies. Several organizations have a travel and expense management policy as well, to ensure efficiency and prevent misuse or fraud. This is, however, an expensive process now. Studies reveal that despite economic uncertainty, over 1 in 3 companies will spend upwards of $250,000 on business travel this year.  

Read on to know why spending on T&E management is worth the money, why it is critical at organizations, how to optimize this spending, stay compliant, and reduce policy violations.  

What is Travel and Expense Management?  

Travel and expense (T&E) management is the documentation and processing of organizational business costs for tax deduction, budget compliance, business intelligence, and employee experience management.   

How Does Travel and Expense Management Work?  

The T&E process has six key steps:  

The employee places a travel request

In a manual system, the individual must first submit a trip request and obtain permission before commencing the booking process. In contrast, requests and approvals happen instantly within an automated travel and cost management system. HR departments would benefit from having a platform where individuals can submit requests for business travel. This may be a pre-populated form with the bulk of employee information, like identity, title, and reporting authority. Employees only need to submit information pertinent to the upcoming trip.  

The manager and/or HR partner approve the request

Once individuals complete their applications, they are forwarded to one or more individuals for approval. This is where having a well-defined travel management strategy for the organization comes in handy. In accordance with the policy, the manager may manually approve, seek clarifications on, or reject the request using a web-based travel and expense management software.  

The travel team makes the booking

The first two stages enable the travel department or team to gather all necessary itinerary information in a centralized location. After that, employees are given various ticket options to choose from and reservations are made. Employees are sometimes also given the option to select their dining and seating preferences, as well as their lodging and rental vehicle requirements. Some businesses may choose to employ a third-party travel agency to complete this task on their behalf.  

Employees submit expense reports

Employees are able to collect and submit expenditure receipts in real-time. This saves them a great deal of effort when they return to their base of operations. There are also financial management applications available in the market that can extract data from a digital receipt and classify the spending.  

Some T&E tools enable workers to scan and record actual receipts via a mobile app, and then submit the expense report. The remainder of the report can be compiled based on real costs incurred at the time of the business trip.The expenses are simultaneously communicated to appropriate departments or supervisors for approval.  

Managers and/or HR approves the expenses

Multiple approvals are permissible – even required – if they are planned well. By establishing an approvals hierarchy, you can guarantee that relevant information reaches the right individual at the right time. You may also choose to automatically accept cost requests in specific circumstances, such as for food purchases under $10. Prior to taking the next step, finance teams may need to re-check expense claims amongst employees and approvers.  

Finance teams or T&E accountants reimburse the business travel costs

The reimbursement of travel expenses is the last step in the travel and expense management process. Following approvals from the finance team, one may set up an automated trip reimbursement system in which the funds are sent straight into the individuals' bank accounts.  

Corporate credit cards could also save time, monitor spending, and automatically reconcile card balances. Consider obtaining employee feedback on the procedure at the conclusion of each trip. Regular feedback and frequent process improvements can further simplify your procedures.  

Learn More: Make Your Business Go Places With Darwinbox’s Brand New Travel Module!    

Formulating a Travel and Expense Management Policy  

A travel and expense policy seeks to address all potential concerns, pertaining to policy guidelines and budgets. If these questions are unanswered, it could lead to damaging outcomes such as policy violations, out-of-policy expenditures, false expense claims, and a sharp decline in compliance.   

T&E expenses represent the most frequently incurred form of business expenses. In addition, it's the second-largest expenditure that is hardest to manage for a company, after remuneration. Therefore, a robust policy is required to regulate it.  

The goal of a travel and expenditure policy is to remove or minimize the risk factors associated with expense reporting. It does this by outlining the principles and guidelines that finance teams and individuals must adhere to while handling business travel costs.  

Listed below are some of the spending categories that should be included in any travel and expense management framework.  

• Airfare and ground transportation costs  
• Hotel reservations and other accommodation  
• Travel advances and cash expenses  
• Corporate credit card charges   
• Healthcare and insurance costs  
• Per diem allowances  

Learn More: How To Automate Travel Expense Reporting in Enterprises    

Importance of Travel and Expense Management: 10 Key Benefits  

A robust T&E capability is essential for businesses because it offers the following benefits:  

Maintain a data trail for audits

In the eventuality of an audit, the benefits of travel and expense control become abundantly clear. Being capable of accounting for every trip and business expense makes working with auditors much easier.  

Certain software solutions alert employees when they could be incorrectly reporting an item as a legitimate cost. Depending on the business's travel expense regulations, the company may additionally configure T&E software to determine which charges are permissible and which are not.  

The solution will maintain complete records of expenses incurred, along with per employee, per team, and per expense category analytics.  

Prevent expense fraud

One could assume that only large corporations are affected by travel expense fraud. Now, this is not even close to the truth!  Frequently, small businesses must deal with individuals who file fraudulent expense reports supported by fake documents. With modern technology, it is quite simple to forge a receipt. By clearly articulating everything in the travel and expense policy, there's really minimal possibility that an employee would misinterpret which charges are permitted and which are not.  

Save employee time and effort

Maintaining receipts, ensuring expense compliance with policies, and completing expense reports on time can be tedious and repetitive for your employees who travel frequently. This might be particularly challenging in the event of abrupt scheduling changes.  

A travel and expense system facilitates the tracking, scanning, and storage of receipts for business expenses. Your employees may file their travel expense statements with a single click after the trip has ended. This saves them considerable time, effort, and productive hours.  

Build customer relationships

Business travel is frequently a wonderful opportunity to interact with new people and cultivate new partnerships. This not only helps you develop ties with individuals in your area of business, but it also enables you to form new relationships with suppliers, prospects, and customers, among others. In fact, travel and expense management are essential for business development and sales, with a direct impact on your annual revenues.  

Improve productivity for finance

If you ask financial experts about the most time-consuming aspects of managing expenses, they will undoubtedly include analyzing expense reports and pursuing employees for reimbursements. A well-designed T&E system can now simply automate the aforementioned tasks and much more. By automating travel and expenditure management, one may boost the finance department's productivity and performance.  

Accountants can instead use the saved time to focus on spending forecasts, planning, and long-term cost savings.  

React better to crises

During the early months of the pandemic, the greatest challenge was the lack of a transition period. Many governments enacted lockdowns relatively quickly, while others began by restricting travel to affected areas.  

Having a clear travel and expense policy enables businesses to respond to unexpected events without losing financial control.  

As an organization, you want to convince your workers that you would do whatever it takes to ensure their safety, while also being able to determine the cost of these activities promptly. A method that is automated may expedite the repayment of emergency expenditures and provide finance teams with real-time insights into the underlying reasons behind spending.  

Enhance employee experience

Paper-based expense tracking isn’t a great option  in today's business environment. Keeping track of tangible receipts, recalling the policy, and submitting reports on time may impose an enormous burden on individuals.  In contrast, a robust, digitally-empowered T&E system can make the employee experience much smoother. For instance, systems that use OCR technologies to scan receipts and input personal or corporate card transactions straight into the system expedite submissions and, ultimately, reimbursement.  

Drive organizational health and business stability

Since the COVID-19 pandemic hit, the terms 'pivot' and 'unprecedented' have become popular terms. Managing cash flow is always a crucial problem for organizations in difficult times. Inadequate cash flow might result in a delay in employee payments and increased uncertainty about the company's survival.A travel and expense management system provides organizations with greater visibility. Without having to go through paperwork, you can clearly ascertain where income is flowing in  — and where it is going outs – as well as filter results by business unit.  

Stay compliant with internal, state, federal, and industry laws

T&E management systems help organizations maintain compliance with local, state, and federal tax authorities. Companies may classify expenses, such as office, travel, and mileage, and appropriately tag them. In the event of an audit, the software may also provide easily accessible digital copies of documents and receipts, which are invaluable.  

Reduce delays and errors

With old-school, unstructured expenditure reports, employees could make data-entry errors. A reliable T&E management system can indicate inaccuracies and duplicate entries, avoid overpayment, and raise alarms if something seems excessive and expensive. Additionally, the software may send warnings when a statement or reimbursement is overdue for payment.  

Some solutions draw information straight from savings/checking accounts and credit card transactions and are interoperable with enterprise travel management solutions. Employees can access receipts on their portable devices and upload them to reports, thereby minimizing the possibility of typographical errors.All of this, together with a strict travel and expense policy, ensures that employees are reimbursed correctly and on time.  

Learn More: Rethinking Your Travel & Expense Management With Smarter Technology    

10 Features You Need in a Travel and Expense System  

An ideal travel and expense management system has the following features:  

Role-based user experience and access

The software should offer unique functions for each user. The administrator must be able to add multiple users and designate roles depending on their respective permission levels. For instance, although the head of the sales department must supervise the authorization process for the whole division, the sales engineer assigned to them must only submit his/her trip cost report.  

Programmable expense limits

Using this function, users may configure the system in accordance with your organization's travel policies, such as expense amount caps, per diems, mileage charges, and approval protocols. Different departments may have different spending demands and expenditure restrictions (e.g., sales vs. product); consequently, a robust travel and expense system will enable you to establish customized policies for each.  

AI-powered paper document scanning

Employees no longer need to manually record each cost or be concerned about losing receipts. They could simply click a picture of the receipt using a smartphone application. The optical character recognition (OCR) engine will extract the vendor name, dates, and amounts to generate an expense report. The digital versions of the receipts are then retained until the transaction is fully processed.  

Credit card integration

Providing employees with corporate credit cards increases spending transparency, avoids overspending, and decreases fraudulent charges. The travel manager may establish spending limitations for the cards so that each employee receives a card with a predetermined budget. The T&E system should have a dashboard where you can monitor card activity in real time. Along with credit cards, you may also need support for prepaid corporate cards.  

Expense reporting automation

Preparing and filing expense reports manually is laborious and time consuming. You should therefore look for a solution that automates this process. The unreported costs from a certain time period are automatically combined into a report, which also includes any additional expenses presented by the employee. The report will be forwarded automatically to the designated approver.  

Tight-knit integrations

It is a good idea to choose a T&E system that is truly automated with core, payroll , attendance, and finance. Integrations will also ensure that travel and expense reside within the same human resource management system (HRMS) app with custom reminders, tasks, and self-service. Integration with customer relationship management (CRM) is another feature to look for in case of expense management in sales.  

Web-based and centralized

Employees need to be able to file and monitor expense reports via mobile devices or web browsers. A cloud-hosted web-based expense management solution enables administrators to monitor and approve claims from any location. Moreover, information such as expenses, gifts, taxes, and vendor data must be available and extractable from a single source.  

Multi-currency support

When employees travel for business, they incur a range of expenditures that are paid in the local currency. Documenting these charges requires manually converting every purchase into your domestic currency, which can burden administrators during the filing process. Look for corporate travel expense software that enables multi-currency capabilities to address this problem.  

Approval workflow automation

Rule-based automated processes decrease the need for manual intervention and accelerate the approval procedure. For instance, you may establish approval criteria for expense reports that exceed a specific threshold and must be reported to the finance director. Additionally, you should be able to establish parameters for automatically rejecting expense reports.  

Travel and expense analytics

T&E systems provide a variety of real-time analytics reports on spending, financial statements, reimbursements, policy breaches, and other areas. With this data, it is possible to track every dollar invested and gain insights into travel costs. You can view reports grouped by location, division, employee, or spending categories for a breakdown of the top policy abusers, programs where the bulk of your funds are being spent, policies being violated, etc.  

Learn More: SAP Concur vs. Darwinbox T&E: Detailed Feature and ROI Comparison    

Travel and Expense Management Pitfalls to Avoid  

Without the appropriate policy and digital systems to support it, T&E management is vulnerable to the following challenges:  

• Lack of visibility : When your expense procedures are slow-moving, data gathering will also be sluggish. Managers and budget controllers who lack immediate visibility into spending cannot make intelligent decisions for the time period in question. Instead, their budgetary adjustments will be entirely reactionary.  
• Inaccurate expense submissions : Processing expense reports is a cumbersome undertaking, particularly when it must be performed several times over, due to erroneous and/or late expenditure form submissions. Outdated, manual systems have tedious and time-consuming submission processes, and are open to several loopholes.  
• No sense of empowerment for employees : The conventional method of T&E management focuses solely on control. A travel manager or office manager will ensure that all trips are booked within budget. However, this could trouble travelers who would prefer to arrange their own trips instead of having to depend on their managers for all bookings.  
• Unauthorized expenses : WIthout a robust, secure T&E management system, it is easy for unauthorized travel reservations to sneak in between the cracks. Even if you have pre-approval procedures, it might be difficult to determine whether reservations adhere to your company's travel expense regulations.  
• Dent in personal finances : Slow processes result in delayed reimbursement for travelers. Especially if they were to make a significant purchase, this might make managing their personal finances difficult.  
• Lost receipts and tickets : The disappearance of paper receipts is a major problem for individuals in charge of expense management processes in small businesses. When workers lose their receipts, the organization cannot compensate them for resources consumed on business travel, as there is no evidence that the expense was incurred.  
• Overly complicated record management : Ineffective T&E management makes it challenging to determine whether costs qualify as permissible. When certain staff purchases qualify, while others do not, the process of separating them becomes muddled and labor-intensive, making the closing of the fiscal year even more stressful than it ought to be.  
• Limited fund access : Without travel and expense management, several businesses continue to use a singular corporate card for the entire workforce. When shared cards are physically passed from employee to employee, there’s a possibility that they will be   misplaced.  

To address and eliminate these challenges, most organizations are now turning to travel and expense management software solutions. These are easy-to-use apps with clients for employees as well as approvers and finance teams to manage the end-to-end T&E workflow. Some apps come with pre-programmed compliance rules and expense thresholds. This, and other key features mentioned above, make T&E software an invaluable tool for organizations.  

Travel and Expense Best Practices to Remember  

Given the complicated yet mission-critical nature of travel and expense processes, HR and finance teams must pay close attention to all its elements. Fortunately, there are several things you can do to simplify T&E management:  

• Define your business travel budget

After resuming hybrid or full-time office work  following the pandemic, the first thing a company should do is establish a separate travel budget. If there is no historical data available, the finance team should consult with the heads of other departments to estimate the volume of business travel that will be necessary for the year.  

• Be bold with automation

The way travel expenses are handled requires a lot of manual work. From paper receipts to typing numbers into a spreadsheet, there are many ways to make a system more automated. You can make things run more smoothly by automating approvals for a certain amount or making entries right away through OCR. Identify the inefficiencies, and automate any task that’s mundane and/or high-volume.  

• Try to centralize bookings on a single platform

You can make life easier for your whole financial team if you only use one booking platform. When all employees book their travel in the same place, it's easier for them to keep track of their receipts and emails and lessen the chaos. Even better, a single booking platform makes it easy to see all of these costs at once in one place, giving you visibility.  

• Remove known bottlenecks

Set up your workflows so that you can easily auto-approve spending that is important and unavoidable. This could mean that business class tickets are automatically turned down, or that food costs under a certain limit are automatically approved. In the same way, you need to set up an approval hierarchy that makes your reimbursement processes quick and easy, by looping in the right people who are aware of employees’ travel plans.  

• Go paperless

If you haven’t done so already, replace paper-based travel and expense management with cloud-based tools. Travelers should be able to use your T&E management system to record expenditures, scan bills, and submit digital requests and reports, rather than filling out paper expense forms.  

• Be objective with expense policies

When setting expenditure standards, it is ideal to set common, standard conditions for the entire workforce. For instance, if you provide managers with much greater corporate spending allocation and flexibility for business trip reservations than other team members, it can cause discontent and conflict among the workforce. However, you can tailor policies for different projects or departments. For instance, recruiting and sales may have a greater average expenditure than the company's general average.  

• Make sure to provide a mobile app

Most corporate business travel costs occur on the road, and it is not always possible for an employee to check the balance of their digital expense wallet on their laptop. That's why it is essential that you select expense management software with a mobile app. Also, employees now regularly use their mobile phones for work purposes, after prolonged periods of remote/hybrid work. A mobile travel and expense app will elevate their work experience.  

• Integrate travel and expense management with HR

There are a lot of different SaaS tools that companies use to manage their travel and expense processes. But it's common to waste time by switching between dashboards and apps that do the same thing in order to finish a single task. Choose solutions with a wide range of features and integrations that work well together. For example, Darwinbox offers T&E management in sync with the HRMS and payroll, so you have zero effort or data duplication.  

• Ensure your travel and expense policy is simple and uncomplicated

The policies should be easy for employees to understand and  all employees must be aware of all the expenses they are allowed to make. This way, they can be sure about what they spend for and during business travel. Ensure you distill your multi-page handbook into a short policy document that employees will actually peruse and understand.  

• Update your policy every year

Employees' habits about business travel and out-of-pocket costs will inevitably evolve as your company matures and develops. You need to revise your spending policy to reflect the current demands of your business. By maintaining an up-to-date T&E policy, you will ease your staff's concerns about booking travel with the incorrect vendors or going over budget. Don’t forget to notify employees of the major changes they need to remember.  

Learn More: 3 Pillars Of Digitizing Your Travel & Expense Management Strategy    

Conclusion   

Today, business travel is more important than ever before. A 2022 survey by the Global Business Travel Association found that internal travel is back to 50% of pre-pandemic levels. Moreover, nearly 8 in 10 travel managers expect the number of trips to increase dramatically in 2023. A well-defined travel and expense strategy aided by a powerful, easy-to-use T&E tool can help you track expenses and stay compliant.  

Request a Darwinbox Travel and Expense demo to learn more!  

Recommended Reading

How does travel and expense management improve employee experience, establishing a travel and expenses process: strategy, steps & best practices, how to detect and prevent expense fraud, speak your mind.

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Common rental property travel expenses and how to track them

Deducting your rental property travel expenses can save you a lot of money on your taxes. Many real estate investors can write off almost all travel-related costs associated with their rental properties. This includes mileage, meals, lodging, and other related expenses. By keeping track of all your deductions, you can reduce your taxable income and save money.

Key takeaways

• Rental property travel expenses are a deduction that many real estate investors can claim to reduce taxable net income.
• Common travel expense deductions for rental property include auto, travel expenses to visit a rental property in another location, and meals and lodging.
• Schedule E, Form 1040, is used to report rental property travel expenses and income and operating expenses at the end of each year.

What are rental property travel expenses? 

Rental property owners can deduct many travel expenses. These include mileage, meals, lodging, and other travel-related costs:

• Mileage is a typical travel expense that can be deducted. For example, if you’re traveling to and from your rental property, you can deduct the mileage from your taxes. This includes the cost of gas and wear and tear on your vehicle.
• Meals are another typical travel expense that can be deducted. This includes the cost of restaurants and other food-related expenses.
• Lodging is another typical travel expense that can be deducted. This includes the cost of hotels, motels, and other lodging expenses.
• Other travel expenses that can be deducted include the cost of transportation, baggage fees, and tips. As a rule of thumb, real estate investors can deduct these costs from the rental income collected. 

Keeping track of all your rental property travel expenses can help to reduce your taxable income and save money.

How to deduct rental property travel expenses from your taxes 

If you’re a real estate investor, you can deduct your travel expenses from your taxable income. 

When deducting travel expenses, keep track of all your receipts and expenses. This will help you stay organized and ensure that you can deduct all of your eligible expenses. 

Simply fill out Schedule E, Form 1040, and attach it to your tax return to deduct your travel expenses. Keep accurate records of all your travel expenses so you can properly deduct them from your taxes. 

What is Schedule E? 

Real estate investors use Schedule E to report rental property income and expenses. 

The Schedule E instructions booklet provides guidance on how to complete the form, including how to calculate your total rent receipts and deductible expenses. Schedule E is also used to report income or loss from partnerships, S corporations, estates, trusts, and real estate investment trusts (REITs). 

If you have any questions about how to complete Schedule E, consult with a qualified tax professional or visit the Stessa Tax Center for helpful blog posts detailing tax preparation best practices, deduction strategies, and a suite of tax resources created in partnership with The Real Estate CPA.

How to keep track of all your deductions to save money on your taxes 

Rental property owners know that there are many tax deductions available to them. However, keeping track of all of the different deductions can be a challenge. There are several methods and systems that landlords can use to keep track of their rental property tax deductions.

One popular method is to use a spreadsheet to track all of your expenses related to the property. This can be a helpful way to see at a glance what expenses are eligible for deduction and how much you can deduct each year. 

Another option is to use special software designed specifically for tracking rental property tax deductions. This type of software can be particularly helpful if you own multiple properties, as it can help you track deductions across all of your properties in one place. 

For example, Stessa provides rental property software for landlords to help them maximize profits through smart money management, automatic income and expense tracking, personalized reporting, and much more.   

After signing up for a free Stessa account and entering property, bank, and mortgage account information, income and expense transactions are automatically synced. You can begin monitoring your rental property investments from a single, comprehensive online dashboard. 

Rental property financial management software from Stessa can be used with an unlimited number of real estate portfolios, and over 200,000 investors are already using Stessa to track and optimize their properties.

With Stessa, you also get access to:

• Automated accounting tools : Replace cumbersome spreadsheets and easily track income and expenses. Stessa automates the process of categorizing transactions, reducing time spent on manual data entry.
• Manual expense tracking : Enjoy precise record-keeping of all property-related expenses, from maintenance costs to insurance fees, for a comprehensive view of property expenditures.
• One-click smart receipt scanning : Quickly and accurately add expense receipts to your property records, reducing the risk of losing or misplacing vital receipts.
• Mileage tracking : Track all travel related to your property management efforts for accurate expense reporting. This feature is particularly beneficial for tax purposes, as you can sometimes deduct these costs from taxable income.
• Automated bank feeds : Connect unlimited bank accounts for real-time income and expense tracking so you can manage your cash flow effectively and stay on top of your financial situation.
• Centralized dashboard with key metrics and complete chart history : Access a clear real-time overview of your property performance. The dashboard displays critical metrics and historical data in an intuitive, easy-to-understand format.
• Rental applications : Manage tenant applications efficiently and effectively by streamlining the process of publishing vacancies, and collecting and reviewing applications.
• Tenant screening : Use a proprietary approach with RentPrep for comprehensive tenant checks, including a full credit report, background check, and more. For additional screening, landlords can add income verification or judgment and liens, increasing the odds of selecting reliable tenants.
• Online rent collection : Automate your rent collection process, including payment reminders and late fees, reducing the likelihood of missed or late payments.
• Landlord banking : Open FDIC-insured bank accounts and enjoy a more efficient way to manage your property-related finances. You can also earn more than 10x the national average interest rate on every dollar of deposits.*
• Mobile app (iOS and Android) : Utilize Stessa’s mobile app to help you manage your properties on the go. You can categorize transactions, check key metrics, scan receipts, and view your portfolio from almost anywhere, anytime.
• eSigning : Simplify lease signing and other document execution with integrated eSignature capabilities. This feature makes it easier for landlords and tenants to sign important documents, reducing the need for in-person meetings.
• Tax center : Tax time is a cinch thanks to the Stessa Tax Package feature. It helps aggregate your transactions and sends you personalized tax reports via email with digital copies of all of your receipts packaged into a single ZIP file.

Whichever method you choose, staying on top of your rental property tax deductions is essential to maintaining a healthy bottom line.

Common mistakes investors make when deducting rental property travel expenses

Many real estate investors make the mistake of thinking that any travel expense related to their rental property is deductible. However, there are a few key things to keep in mind when it comes to deducting rental property travel expenses. 

First, the Internal Revenue Service (IRS) only allows you to deduct expenses that are considered “necessary and ordinary.” This means that you can’t deduct lavish expenses, such as first-class airfare or stays at luxury hotels. 

Secondly, you can only deduct travel expenses directly related to your rental property. For example, if you drive to your rental property to perform repairs, you can deduct the cost of gas. However, if you meet up with friends for lunch after, that expense would not be deductible. 

Finally, you can only deduct travel expenses that you actually incur. This means that if you drive your own car, you can only deduct the actual cost of gas, not a car rental cost. 

By keeping these 3 things in mind, you can ensure that you’re taking all the proper deductions for your rental property travel expenses.

Topic No. 511 Business Travel Expenses from the IRS provides details on deductible travel expenses real estate investors can claim and common items that can and can’t be deducted.

Tips for claiming expenses

To claim these expenses, keep accurate records of all transactions related to the rental property. This includes receipts, invoices, and bank statements. In addition, you will need to keep track of the dates the expenses were incurred and the amount paid. 

Final thoughts

Rental property travel expenses can be a great way to save money on your taxes. By keeping track of all your deductions, you can ensure that you take advantage of every possible opportunity to reduce your taxable income. 

For more information on rental property tax deductions, investors may wish to review the instructions for IRS Schedule E (Form 1040), speak with a qualified accountant or tax advisor, and visit the Stessa Tax Center for a free tax guide and top tax deduction tips, including travel expenses.

*Stessa is not a bank. Stessa is a financial technology company. Terms and conditions, features and pricing are subject to change.   This article, and the Stessa Blog in general, is intended for informational and educational purposes only, and is not investment, tax, financial planning, financial, legal, or real estate advice. 

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What Are Travel Expenses?

Understanding travel expenses, the bottom line.

• Deductions & Credits
• Tax Deductions

Travel Expenses Definition and Tax Deductible Categories

Michelle P. Scott is a New York attorney with extensive experience in tax, corporate, financial, and nonprofit law, and public policy. As General Counsel, private practitioner, and Congressional counsel, she has advised financial institutions, businesses, charities, individuals, and public officials, and written and lectured extensively.

For tax purposes, travel expenses are costs associated with traveling to conduct business-related activities. Reasonable travel expenses can generally be deducted from taxable income by a company when its employees incur costs while traveling away from home specifically for business. That business can include conferences or meetings.

Key Takeaways

• Travel expenses are tax-deductible only if they were incurred to conduct business-related activities.
• Only ordinary and necessary travel expenses are deductible; expenses that are deemed unreasonable, lavish, or extravagant are not deductible.
• The IRS considers employees to be traveling if their business obligations require them to be away from their "tax home” substantially longer than an ordinary day's work.
• Examples of deductible travel expenses include airfare, lodging, transportation services, meals and tips, and the use of communications devices.

Travel expenses incurred while on an indefinite work assignment that lasts more than one year are not deductible for tax purposes.

The Internal Revenue Service (IRS) considers employees to be traveling if their business obligations require them to be away from their "tax home" (the area where their main place of business is located) for substantially longer than an ordinary workday, and they need to get sleep or rest to meet the demands of their work while away.

Well-organized records—such as receipts, canceled checks, and other documents that support a deduction—can help you get reimbursed by your employer and can help your employer prepare tax returns. Examples of travel expenses can include:

• Airfare and lodging for the express purpose of conducting business away from home
• Transportation services such as taxis, buses, or trains to the airport or to and around the travel destination
• The cost of meals and tips, dry cleaning service for clothes, and the cost of business calls during business travel
• The cost of computer rental and other communications devices while on the business trip

Travel expenses do not include regular commuting costs.

Individual wage earners can no longer deduct unreimbursed business expenses. That deduction was one of many eliminated by the Tax Cuts and Jobs Act of 2017.

While many travel expenses can be deducted by businesses, those that are deemed unreasonable, lavish, or extravagant, or expenditures for personal purposes, may be excluded.

Types of Travel Expenses

Types of travel expenses can include:

• Personal vehicle expenses
• Taxi or rideshare expenses
• Airfare, train fare, or ferry fees
• Laundry and dry cleaning
• Business meals
• Business calls
• Shipment costs for work-related materials
• Some equipment rentals, such as computers or trailers

The use of a personal vehicle in conjunction with a business trip, including actual mileage, tolls, and parking fees, can be included as a travel expense. The cost of using rental vehicles can also be counted as a travel expense, though only for the business-use portion of the trip. For instance, if in the course of a business trip, you visited a family member or acquaintance, the cost of driving from the hotel to visit them would not qualify for travel expense deductions .

The IRS allows other types of ordinary and necessary expenses to be treated as related to business travel for deduction purposes. Such expenses can include transport to and from a business meal, the hiring of a public stenographer, payment for computer rental fees related to the trip, and the shipment of luggage and display materials used for business presentations.

Travel expenses can also include operating and maintaining a house trailer as part of the business trip.

Can I Deduct My Business Travel Expenses?

Business travel expenses can no longer be deducted by individuals.

If you are self-employed or operate your own business, you can deduct those "ordinary and necessary" business expenses from your return.

If you work for a company and are reimbursed for the costs of your business travel , your employer will deduct those costs at tax time.

Do I Need Receipts for Travel Expenses?

Yes. Whether you're an employee claiming reimbursement from an employer or a business owner claiming a tax deduction, you need to prepare to prove your expenditures. Keep a running log of your expenses and file away the receipts as backup.

What Are Reasonable Travel Expenses?

Reasonable travel expenses, from the viewpoint of an employer or the IRS, would include transportation to and from the business destination, accommodation costs, and meal costs. Certainly, business supplies and equipment necessary to do the job away from home are reasonable. Taxis or Ubers taken during the business trip are reasonable.

Unreasonable is a judgment call. The boss or the IRS might well frown upon a bill for a hotel suite instead of a room, or a sports car rental instead of a sedan.

Individual taxpayers need no longer fret over recordkeeping for unreimbursed travel expenses. They're no longer tax deductible by individuals, at least until 2025 when the provisions in the latest tax reform package are due to expire or be extended.

If you are self-employed or own your own business, you should keep records of your business travel expenses so that you can deduct them properly.

Internal Revenue Service. " Topic No. 511, Business Travel Expenses ."

Internal Revenue Service. " Publication 463, Travel, Gift, and Car Expenses ," Page 13.

Internal Revenue Service. " Publication 5307, Tax Reform Basics for Individuals and Families ," Page 7.

Internal Revenue Service. " Publication 463, Travel, Gift, and Car Expenses ," Pages 6-7, 13-14.

Internal Revenue Service. " Publication 463, Travel, Gift, and Car Expenses ," Page 4.

Internal Revenue Service. " Publication 5307, Tax Reform Basics for Individuals and Families ," Pages 5, 7.

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• EXPENSES & DEDUCTIONS

Service businesses that qualify for the 20% QBI deduction

• Individual Income Taxation

One major provision of the law known as the Tax Cuts and Jobs Act (TCJA), P.L. 115 - 97 , is a new tax deduction for passthrough entities (S corporations, partnerships, and sole proprietorships) under Sec. 199A. The deduction generally provides owners, shareholders, or partners a 20% deduction on their personal tax returns on their qualified business income (QBI). Various limitations apply based on the type of business operated and the amount of income the business has. While the calculation of the deduction amount is beyond the scope of this discussion, a summary follows of the limitations that apply to specified service trades or businesses (SSTBs).

The Internal Revenue Code has historically treated professional service businesses more harshly than any other type of business, and this continues with the Sec. 199A deduction. (For example, before the TCJA, professional service corporations, as defined in Sec. 448(d)(2) were taxed at a flat 35% tax rate rather than the graduated tax rates applicable to a C corporation under Sec. 11(b).) Under the new rules, this deduction does not apply to certain enumerated SSTBs if the taxpayer's taxable income is above certain threshold amounts. The threshold amounts are $315,000 for taxpayers filing jointly and $157,500 for all other taxpayers, with a deduction phaseout range, or limitation phase - in range, of $100,000 and $50,000, respectively, above these amounts.

SSTBs are broken into two distinct categories:

1.Trades or businesses performing services in the fields of health, law, accounting, actuarial science, performing arts, consulting, athletics, financial services, brokerage services, or any trade or business where the principal asset of that trade or business is the reputation or skill of one or more of its employees (these fields are listed in Sec. 1202(e)(3)(A); however, the TCJA specifically excluded engineering and architecture); or

2. Any trade or business that involves the performance of services that consist of investing and investment management, trading, or dealing in securities described in Sec. 475(c)(2), partnership interests, or commodities described in Sec. 475(e)(2) (Sec. 199A(d)(2)(B)).

This definition caused much discussion among tax professionals and their clients. Many of the following questions came up in the authors' practice: "What does it mean to have a principal asset be the reputation or skill of one or more of its employees?"; "Does my hair salon that is operated as a sole proprietorship fall under this category?"; "I sell life insurance. Does that mean I am not eligible for this deduction?"; "Does my computer consulting and repair business fall under the category of consulting?"; and "The partners in a law firm also own the building where the law firm is located. Will the rental income qualify for this deduction?"

On Aug. 8, 2018, Treasury issued proposed regulations ( REG - 107892 - 18 ) that provided clarity regarding the definition of an SSTB. The proposed regulations also established a safe - harbor provision and anti - abuse provisions, which were not included in the TCJA.

Before continuing this discussion, two points need to be made clear. First, if taxpayers are below the threshold amounts, they are eligible for the 20% deduction regardless of whether their business is an SSTB. Second, the SSTB classification applies to the business regardless of whether the taxpayer is actively or passively involved in it.

Definitions under Prop. Regs. Sec. 1.199A-5(b)(2)

Many questions about the new law concern the field of consulting and businesses where the principal asset is the reputation or skill of one or more of its employees (reputation and skill provision). The proposed regulations define consulting as providing "professional advice and counsel to clients to assist the client in achieving goals and solving problems" (Prop. Regs. Sec. 1. 199A - 5 (b)(2)(vii)). Additionally, consulting also includes advice and counsel related to lobbying efforts (id.). However, consulting does not include advice performed in conjunction with the sale of goods or services that would not otherwise be an SSTB, if that service is not billed separately (id.). The determination of whether clients are considered to be involved with consulting services is a facts - and - circumstances , case - by - case scenario. When making this determination, a CPA should look for instances where the client is providing recommendations and advice without any type of corresponding goods or services, especially if the client is providing a formal written recommendation report.

The proposed regulations significantly narrow the meaning of the reputation and skill provision. Specifically, they enumerate only the following three instances where a taxpayer would fall under this provision:

• A trade or business in which a person receives fees, compensation, or other income for endorsing products or services;
• A trade or business in which a person licenses or receives fees, compensation, or other income for the use of an individual's image, likeness, name, signature, voice, trademark, or any other symbols associated with the individual's identity; or
• Receiving fees, compensation, or other income for appearing at an event or on radio, television, or another media format (Prop. Regs. Sec. 1.199A-5(b)(2)(xiv)).

To sum up the reputation and skill provision, it targets celebrities and public figures who make their living in the public eye. This was a welcome relief for many taxpayers, as it was uncertain how expansive this definition would be.

The definitions in Prop. Regs. Sec. 199A - 5 (b)(2) of performing services in the fields of law, accounting, and actuarial science include all of the expected services and provide no surprises. The field of law includes those legal and related services provided by "lawyers, paralegals, legal arbitrators, mediators, and similar professionals" (Prop. Regs. Sec. 1. 199A - 5 (b)(2)(iii)). The field of accounting includes services provided by "accountants, enrolled agents, return preparers, financial auditors, and similar professionals" (Prop. Regs. Sec. 1. 199A - 5 (b)(2)(iv)). The field of actuarial science includes all services performed by "actuaries and similar professionals" (Prop. Regs. Sec. 1. 199A - 5 (b)(2)(v)).

The fields of athletics and performing arts are similar in the approach of who and what is considered to be providing services. In both cases, it is the service of those participating in the creation of performing arts, including the performers and the directors, or those who are participating in the athletic competition, including the players, coaches, and team managers. However, in both cases, it does not include the maintenance and operation of equipment or facilities, nor does it include the "services by persons who broadcast or otherwise disseminate video or audio . . . to the public" (Prop. Regs. Secs. 1. 199A - 5 (b)(2)(vi) and (viii)).

The field of health is defined as providing medical services by medical professionals directly to a patient by "physicians, pharmacists, nurses, dentists, veterinarians, physical therapists, psychologists, and other similar healthcare professionals" (Prop. Regs. Sec. 1. 199A - 5 (b)(2)(ii)). However, it does not include the provision of services not directly related to a medical services field — for example, the operations of health clubs, payment processing, research, testing, or manufacturing or sales of pharmaceuticals or medical devices. The key is that there has to be a direct service connection between the medical professional and the patient.

Moving on to the categories of money management (financial services, brokerage services, investing and investment management, services of trading), the definition of financial services is broad, encompassing those services provided by financial advisers, investment bankers, wealth planners, retirement advisers, and similar professionals. Notably, though, traditional banking services (e.g., taking deposits or making loans) were excluded from this definition. These individuals advise clients on wealth management and corporate business transactions (Prop. Regs. Sec. 1. 199A - 5 (b)(2)(ix)). The definition of brokerage services is very narrow; it includes only stockbrokers and similar professionals. The proposed regulations specifically excluded real estate and insurance agents and brokers (Prop. Regs. Sec. 1. 199A - 5 (b)(2)(x)). Excluding these two sets of professionals significantly increased the number of those taxpayers eligible for the deduction.

The fields of trading and investing and investment management also run hand - in - hand , as they both relate to securities and commodities trading. Trading means being in the business of trading securities, commodities, or partnership interests either on the taxpayer's own account or on others' account (Prop. Regs. Sec. 1. 199A - 5 (b)(2)(xi)). Investing and investment management "involv[es] the receipt of fees for providing investing, asset management, or investment management services" (Prop. Regs. Sec. 1. 199A - 5 (b)(2)(xi)). It does not include directly managing real property.

Multiple activities and the de minimis rule

What happens if a client has a trade or business with multiple lines of businesses, where one of the lines is an SSTB? The proposed regulations included a de minimis rule for this situation. If a taxpayer has $25 million or less in gross receipts for the tax year from SSTB activities, it will not be considered an SSTB if less than 10% of the receipts are generated by the SSTB activity (Prop. Regs. Sec. 1. 199A - 5 (c)(1)(i)). If the taxpayer has more than $25 million in gross receipts, it will not be an SSTB if less than 5% of those receipts are generated by the SSTB activity (Prop. Regs. Sec. 1. 199A - 5 (c)(1)(ii)).

Anti-abuse rule

There were many discussions between accountants, lawyers, and their clients about possible reorganization of business entities or reclassification of employees into independent contractors and various other methods to increase the benefit derived from the 20% deduction. In response to this, the IRS included in the proposed regulations various anti - abuse rules. One in particular related to the characterizations of SSTBs.

A non - SSTB entity may still be characterized as an SSTB, or have a portion of its income be considered from an SSTB, if it provides property or services to an SSTB related through common ownership. In this case, common ownership is considered as having 50% or more common owners, after applying the direct and indirect attribution rules of Sec. 267(b) or 707(b) (Prop. Regs. Sec. 1. 199A - 5 (c)(2)(iii)). If the non - SSTB entity provides 80% or more of its property or services to a commonly owned SSTB, then the non - SSTB will be considered an SSTB even if it does not provide any of the enumerated services. If the non - SSTB entity provides 50% or more, but less than 80%, of its property or services to an SSTB, then the portion of the non - SSTB providing property or services to the SSTB will be treated as part of the SSTB (Prop. Regs. Sec. 1. 199A - 5 (c)(2)(ii)).

Due to these proposed regulations, the second and third questions posed at the beginning of this discussion can be answered with relative confidence based on very limited information. The hair salon does not fall under the reputation or skill provision, as it is not generating income from any of the "celebrity" provisions. An individual selling life insurance as an insurance broker is specifically excluded from the SSTB definition.

Unfortunately, it is impossible to answer the final two questions without more information related to what the computer consultant actually does and whether the rental income from the law firm is subject to the SSTB provisions. However, there is now more specific guidance from the IRS to help answer those questions. The proposed regulations certainly did not discuss every situation that CPAs can encounter with clients; however, practitioners know more today than they did last December when the TCJA was enacted.

Editor Notes

Michael D. Koppel , CPA (Retired)/PFS/CITP, is a retired partner with Gray, Gray & Gray LLP in Canton, Mass.

For additional information about these items, contact Mr. Koppel at 781-407-0300 or [email protected] .

Unless otherwise noted, contributors are members of or associated with CPAmerica International.

Recent developments in Sec. 355 spinoffs

The research credit: documenting qualified services, income tax treatment of loyalty point programs, tax court rules cancellation of debt is part of gain realization, listing of reportable transactions under the apa.

This article discusses the history of the deduction of business meal expenses and the new rules under the TCJA and the regulations and provides a framework for documenting and substantiating the deduction.

PRACTICE MANAGEMENT

CPAs assess how their return preparation products performed.

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• 1.32.12.1.1  Background
• 1.32.12.1.2  Authorities
• 1.32.12.1.3.1  CFO and Deputy CFO
• 1.32.12.1.3.2  Associate CFO for Financial Management
• 1.32.12.1.3.3  Travel Management
• 1.32.12.1.3.4  Travel Policy and Review
• 1.32.12.1.3.5  Relocating Employee
• 1.32.12.1.3.6  Business Units
• 1.32.12.1.3.7  CFO Relocation Coordinators
• 1.32.12.1.3.8  CFO Relocation Technicians
• 1.32.12.1.4  Program Management and Review
• 1.32.12.1.5  Program Controls
• 1.32.12.1.6  Terms/Definitions
• 1.32.12.1.7  Acronyms
• 1.32.12.1.8  Related Resources
• 1.32.12.2.1  Travel to the New Official Station Prior to the Report Date
• 1.32.12.2.2  Short Distance Moves
• 1.32.12.3.1  Service Agreements
• 1.32.12.3.2  Time Limits
• 1.32.12.3.3  Advance of Funds
• 1.32.12.4.1  New Appointee
• 1.32.12.4.2  Transferred Employees
• 1.32.12.4.3  Overseas Tour Renewal Travel
• 1.32.12.4.4  Senior Executive Service (SES) Separation for Retirement Last Move Home
• 1.32.12.4.5  Temporary Change of Station (TCS)
• 1.32.12.4.6  Return Separation
• 1.32.12.5.1  Travel Expenses
• 1.32.12.5.2  Per Diem at New Official Station
• 1.32.12.5.3  Use of More Than One Privately-Owned Vehicle (POV) for En Route Travel
• 1.32.12.6  Allowance for Househunting Trip Expenses
• 1.32.12.7  Allowance for Temporary Quarters (TQ) Subsistence Expenses
• 1.32.12.8.1  Actual Expense Method
• 1.32.12.8.2  Unaccompanied Air Baggage (UAB) Allowance
• 1.32.12.8.3  Temporary Storage of Household Goods
• 1.32.12.8.4  Household Goods Traffic Management Program
• 1.32.12.9.1  Extended Storage During Assignment to Isolated Locations Within the Continental United States (CONUS)
• 1.32.12.9.2  Extended Storage During Assignment Outside the Continental United States (OCONUS)
• 1.32.12.10.1  Transportation of Privately-Owned Vehicle (POV) to an Outside the Continental United States (OCONUS) Post of Duty
• 1.32.12.10.2  Return Transportation of a Privately-Owned Vehicle (POV) From an Outside the Continental United States (OCONUS) Post of Duty
• 1.32.12.10.3  Transportation of a Privately-Owned Vehicle (POV) Within the Continental United States (CONUS)
• 1.32.12.10.4  Emergency Storage of a Privately-Owned Vehicle (POV)
• 1.32.12.11  Allowances for Transportation of Mobile Homes and Boats Used as a Primary Residence
• 1.32.12.12.1  Title Requirements
• 1.32.12.12.2  Request for Reimbursement for Residence Sale and Purchase
• 1.32.12.13  Unexpired Lease
• 1.32.12.14  Allowance for Miscellaneous Expenses
• 1.32.12.15  Voucher Submission
• 1.32.12.16  Relocation Income Tax Allowance (RITA)
• 1.32.12.17  Relocation Debts
• 1.32.12.18  Forms

Part 1. Organization, Finance, and Management

Chapter 32. servicewide travel policies and procedures, section 12. irs relocation travel guide, 1.32.12 irs relocation travel guide, manual transmittal.

June 07, 2022

(1) This transmits revised IRM 1.32.12, Servicewide Travel Policies and Procedures, IRS Relocation Travel Guide.

Material Changes

(1) IRM 1.32.12.1.7, Acronyms, Updated acronyms.

(2) IRM 1.32.12.4.1(1)(Table A), New Appointee, Added that for new appointees assigned to first official station in Continental United States (CONUS), IRS must pay or reimburse Relocation Income Tax Allowance (RITA).

(3) IRM 1.32.12.4.1(1)(Table B), New Appointee, Added that for new appointees assigned to first official station in foreign or non-foreign Outside the Continental United States (OCONUS), IRS must pay or reimburse RITA.

(4) IRM 1.32.12.4.2(1)(Table E), Transferred Employees, Added that for transferred employees returning from foreign or non-foreign OCONUS official station to place of actual residence for separation, IRS must pay or reimburse RITA.

(5) IRM 1.32.12.4.4(2)(Table G), Senior Executive Service (SES) Separation for Retirement Last Move Home, Added that for eligible SES career appointees performing a Last Move Home (LMH) and meet the conditions for a separation retirement, IRS must pay or reimburse RITA.

(6) IRM 1.32.12.6(3), Allowance for Househunting Trip Expenses, Updated section for clarification.

(7) IRM 1.32.12.6(7), Allowance for Househunting Trip Expenses, Added paragraph to include provisions and calculations for lump-sum househunting trip expenses.

(8) IRM 1.32.12.7(24), Allowance for Temporary Quarters (TQ) Subsistence Expenses, Added paragraph to explain lump sum Temporary Quarters Subsistence Expense (TQSE) payments.

(9) IRM 1.32.12.7(25), Allowance for Temporary Quarters (TQ) Subsistence Expenses, Added paragraph to explain the calculation for lump sum TQSE payments.

(10) IRM 1.32.12.15(2), Voucher Submission, Added TQ as an expense type and grocery and utility receipts as required documentation.

(11) IRM 1.32.12.17(3), Relocation Debts, Updated section for clarification.

(12) This revision includes changes throughout the document for the following:

Updated the CFO office names and responsibilities

Per Executive Order 13988, references to he/she, him/her and his/hers were updated

Added minor editorial changes to include grammar and minor changes for clarification purposes

Updated links throughout the IRM

Effect on Other Documents

Effective date.

Teresa R. Hunter Chief Financial Officer

Program Scope and Objective

Purpose - This IRM provides the policies and procedures for IRS employees who perform official relocation travel in the interest of the government. It also provides guidance to supervisory and administrative personnel who authorize, direct, review or certify payments for reimbursement of relocation expenses.

Audience - All business units

Policy Owner - CFO, Financial Management

Program Owner - CFO, Financial Management, Travel Management office develops and maintains this IRM.

Primary Stakeholders - The primary stakeholders are employees relocating, domestically and internationally, who have been authorized relocation allowances in the interest of the government.

Program Goals - The goals of this IRM are to ensure that IRS employees receive clear guidance and comply with the IRS relocation policies.

The General Services Administration (GSA) is responsible for establishing governmentwide relocation policies and procedures.

This guide is intended to supplement the Federal Travel Regulations (FTR). The FTR is the regulation contained in 41 Code of Federal Regulations (CFR), Chapters 300 through 304, that implements statutory requirements and executive branch policies for travel by federal civilian employees and others authorized to travel at government expense.

The FTR represents the governing document for relocation policy for all IRS employees. This IRM supplements the FTR by providing IRS-specific policies and procedures where needed. If the FTR differs from the IRM, the FTR is the controlling legal authority.

This guide applies to all employees authorized by the IRS to relocate to a new official station in the interest of the government. It covers foreign and domestic relocations.

Authorities

5 U.S. Code (USC) Section 5707, Regulations and Reports

5 USC Section 5724, Travel and transportation expenses of employees transferred; advance of funds; reimbursement on commuted basis

5 USC Section 5726, Storage expenses; household goods and personal effects

5 USC Section 5737, Relocation expenses of an employee who is performing an extended assignment

5 USC Section 5738, Regulations

31 USC Section 901, Establishment of agency Chief Financial Officers

31 USC Section 902, Authorities and functions of agency Chief Financial Officers

31 USC Section 3726, Payment for Transportation

Department of Treasury Directives

Tax Cuts and Jobs Act of 2017

Federal Travel Regulation, Chapters 300-304

Responsibilities

This section provides responsibilities for:

CFO and Deputy CFO

Associate cfo for financial management, travel management, travel policy and review.

Relocating employee

Business units

CFO relocation coordinators

CFO relocation technicians

The CFO and Deputy CFO are responsible for the oversight of the IRS relocation program and also for:

Overseeing policies and procedures and employee compliance with relocation allowances.

Ensuring criteria is met for basic plus allowances and forwarding the requests to the Associate CFO for Financial Management for decision.

The Associate CFO for Financial Management is responsible for:

Establishing and maintaining policies and controls to ensure compliance on the relocation program for internal accounting operations and financial reporting.

Administering the relocation services contract. See IRM 1.32.13, Relocation Services Program, for additional information.

Approving requests for basic plus allowances for shipment of privately-owned vehicles (POV) within the Continental United States (CONUS) and use of the Relocation Services Program.

Travel Management is responsible for

Developing and issuing IRS relocation program policy.

Updating and maintaining this IRM.

Reviewing and approving an extension for an expired one-year time limitation for employees to claim relocation expenses for an additional one year not to exceed two years.

Travel Policy and Review is responsible for:

Reviewing requests for basic plus allowances and coordinating the requests to Travel Management for further elevation to the Associate CFO for Financial Management for a decision.

Educating customers on FTR and relocation policies.

Relocating Employee

The relocating employee is responsible for:

Signing a Form 4282, Twelve-Month Service Agreement, for a domestic location within CONUS or Form 10902, Overseas Transportation - Service Agreement, for a foreign location Outside the Continental United States (OCONUS) or Form 9803, Transportation Agreement, for posts of duty in a non-foreign OCONUS location.

Receiving an approved relocation authorization prior to incurring any relocation expenses.

Contacting the IRS gaining office and the designated CFO relocation coordinator to determine what relocation expenses are authorized and to ensure that the relocation authorization for basic moving expenses is signed before incurring any expenses. The IRS will not reimburse employees for any expenses incurred before the relocation authorization is approved.

Meeting all prerequisites for use of the basic plus relocation program such as marketing the residence for the specified time period before requesting the service.

Retaining copies of all relocation documents associated with the relocation.

Notifying the CFO relocation coordinator of any requirements to perform temporary duty at another location or locations en route to the new official station or while occupying temporary quarters. Employees must file a separate travel voucher in Concur for any temporary duty expenses.

Reading all furnished materials carefully to understand responsibilities; if employees are misinformed by a government official, the IRS has no legal basis to pay an unauthorized claim. Erroneous advice by an IRS representative does not bind the government to pay a claim that is in violation of regulations.

Submitting signed and approved Form 8741, Relocation Voucher, to the technician, with receipts and supporting documentation within 15 calendar days after completion of the relocation activity and ensuring claimed relocation expenses are correct.

Using the government travel card for official travel including purchases of common carrier transportation, baggage fees, meals, vehicle rentals and other relocation related expenses.

Paying all charges and fees associated with the government travel card by the due date on the invoice. Employees are liable for all charges.

Liquidating a relocation advance on a voucher or submitting a check to the debt collection unit for any amount due.

Paying all billing documents for overweight household goods shipments and non-allowed charges.

Paying all billing documents for withholding taxes associated with the relocation activities.

Ensuring that administrative leave is only used for official relocation activities.

Business Units

The losing office approving official is responsible for:

Reviewing and approving requests for administrative leave for relocation and ensuring the administrative leave is recorded properly for relocation activities prior to the employee’s en route travel.

Coordinating a report date with the gaining office approving official.

Reviewing and approving Form 8741, Relocation Voucher as necessary prior to the employee’s report date to the new official station.

The gaining office approving official is responsible for:

Informing the employee of their transfer within a time frame that provides the employee with sufficient time for preparation for the move.

Signing and verifying information in the service agreement.

Forwarding a copy of the service agreement to the servicing personnel office to be filed in the employee’s official personnel folder.

Signing and verifying information on the relocation authorization for basic moving expenses prior to the employee incurring any relocation expenses.

Signing the amendments, if necessary, to the relocation authorization for basic moving expenses.

Approving shipment of a POV to an OCONUS and/or non-foreign area for the new post of duty (POD) per guidelines of each OCONUS location.

Reviewing Form 8518, Request for the Use of the Relocation Services Contract.

Reviewing Form 14564, Request for Approval for the Basic Plus Allowance Shipment of Privately-Owned Vehicle.

Verifying that Form 8741, Relocation Voucher, are correct and filed within 15 calendar days after completion of each segment of the relocation activity.

Reviewing the requests for the use of the basic plus relocation allowances.

Submitting the requests for the use of the basic plus relocation allowances program to *CFO.Relocation Basic Plus [email protected] for review and submission to the Associate CFO for Financial Management.

Ensuring employees do not use excessive administrative leave for relocation travel and review any hours greater than 200.

Approving Form 4253-C, Relocation Travel Advance Requests.

The gaining budget office is responsible for:

Contacting the designated CFO relocation coordinator to initiate the preparation of the relocation authorization for basic moving expenses immediately to ensure the authorization will be signed by an approving official prior to incurring any expenses.

Providing the correct accounting data for the corresponding accounting string to ensure adequate funding is established to cover the employee’s relocation allowances and ensure funds are obligated for authorized relocation entitlements on the relocation authorization and amendments for basic moving expenses, and relocation authorization amendments for basic plus moving expenses.

Providing employees with a signed relocation authorization for basic moving expenses and relocation authorization amendment for basic plus moving expenses if necessary.

Forwarding signed copies of service agreements, relocation authorizations, amendments and extensions to the CFO relocation coordinator.

Routing any request for basic plus relocation allowances through the head of office or their designee to the Travel Management office for submission to the Associate CFO for Financial Management for decision.

The business unit head of office is responsible for:

Authorizing and approving basic relocation allowances program requests on relocation authorizations for basic moving expenses. This authority may be redelegated, in writing, by the business unit head of office to the director, Strategy and Finance or their equivalent.

Signing requests for use of the basic plus relocation allowances program for shipment of POV and use of the relocation services contract, and forwarding to *CFO Relocation Basic Plus [email protected] for coordination in obtaining the signature of the Associate CFO for Financial Management.

CFO Relocation Coordinators

The CFO relocation coordinators are responsible for:

Counseling and assisting relocating employees with relocation entitlements and allowances.

Preparing relocation authorizations for basic moving expenses and relocation authorization amendments for basic plus moving expenses for approval, if applicable.

Reviewing approved relocation authorizations for basic moving expenses, and relocation authorization amendments for basic plus moving expenses and obligating funding where necessary.

Amending relocation authorizations for basic moving expenses, and amending relocation authorizations for basic plus moving expenses, to revise obligations when an entitlement (or expense) was not previously approved.

Arranging for a professional carrier to pack, load, ship and store the employee’s household goods, unaccompanied air baggage (UAB), and POV, if applicable, and preparing the Internal Revenue Bills of Lading (IRBL) for authorized services.

Assisting employees with completing cost comparisons for shipping a POV.

Assisting employees with preparation of forms to request basic plus relocation allowances.

Assisting employees with requesting use of the relocation services contract. See IRM 1.32.13, Relocation Services Program, for additional information.

Establishing billing documents for overweight charges and non-allowed charges.

Establishing billing documents for withholding taxes associated with payments made to a third-party company on behalf of the employee.

CFO Relocation Technicians

CFO relocation technicians are responsible for:

Reviewing and paying relocation vouchers and invoices submitted for reimbursement.

Validating and entering information in the relocation system.

Processing Relocation Income Tax Allowance (RITA) reimbursement or billing document after reconciliation.

Processing third-party payments to moving companies for household goods services including shipment, storage and delivery.

Processing third-party payments to moving companies for shipment of POVs, if approved.

Processing third-party payments for use of the relocation services contract for home sale and property management services.

Program Management and Review

Internal controls are established to ensure the relocation program is managed effectively. Reviews are conducted to ensure vouchers and invoices are processed according to regulatory requirements and to ensure the expenses are included in gross income for tax compliance.

Program reports: The IRS completes the following reports:

Aging unliquidated relocation obligations

Open relocation voucher report

GSA Relocation Data Call Report

In accordance with 5 USC 5707 (c), Regulations and Reports , all agencies that spend more than $5 million on travel and relocation must provide an annual report to GSA by November 30. GSA provides the required data elements and report format for the annual report.

Program effectiveness: The CFO Travel Operations office completes the following to ensure the program is managed effectively:

Monthly performance matrix that measures whether or not corrective actions are necessary.

Surveys customers quarterly soliciting feedback from relocating employees on relocation voucher processing.

Program Controls

Travel Operations reviews for effectiveness by:

Conducting a weekly review of all relocation vouchers and invoices to ensure compliance with prompt payment processing guidelines.

Performing a review of open relocation obligations quarterly to ensure timely processing of relocation allowances and deobligation of excess amounts.

Reviewing relocation reimbursements and reconciling payments annually to ensure tax withholding and taxable income are recorded properly.

The following chart below describes the internal controls in place for using the relocation travel program:

Terms/Definitions

This section provides IRS terms to supplement the FTR Chapter 300, Part 300-3, Glossary of Terms .

The following terms and definitions apply to this program:

Actual report date - The date when an employee or new appointee physically reports to the new or first official station and performs any integral work related to the transfer or appointment.

Approving official - The manager authorized to approve relocation vouchers in accordance with Servicewide Delegation Orders pertaining to relocation travel.

Authorizing official -The head of office authorized to approve relocation authorizations in accordance with Servicewide Delegation Orders pertaining to relocation travel.

CFO relocation coordinator - The primary employee that provides relocation benefit counseling to relocating employees.

Centrally Billed Account (CBA) - An account set up for travelers who do not have a government travel card for official IRS travel expenses, such as airline and train tickets.

City-to-City - A form of travel to a place, away from an employee's official station, to which the employee is authorized to travel, which may involve an overnight stay or lodging expense.

Federal Insurance Contributions Act (FICA) Tax -- A payroll tax or employment tax imposed by the federal government on both employees and employers to fund Social Security and Medicare.

Foreign area (see also non-foreign area)-- An area that includes the Trust Territories of the Pacific Islands situated both outside the continental United States (OCONUS) and the non-foreign areas.

Gaining office -- The office where the employee will report and which will issue the relocation travel authorization and fund the travel.

Government travel card -- A credit card used to pay for authorized official travel and allowable travel-related expenses. Each travel card reflects an individual account established in the travel cardholder's name. This term is synonymous with travel card, credit card, government issued-travel card and individual billed account (IBA). The travel card is a credit card issued by a financial institution under contract with Treasury which can only be used to pay for authorized official IRS travel and allowable travel-related expenses.

Head of Office -- Any of the following IRS officials: Commissioner of Internal Revenue, Deputy Commissioners, Division Commissioners, IRS Chief Human Capital Officer, Chiefs, Chief Counsel, Chief of Staff, Directors reporting directly to the Commissioner or Deputy Commissioners and National Taxpayer Advocate.

Non-foreign area --The states of Alaska and Hawaii, an area that includes, the Commonwealths of Puerto Rico and the Northern Mariana Islands, Guam, the United States (U.S.) Virgin Islands and the territories and possessions of the United States (excludes the former Trust Territories of the Pacific Islands, which are considered foreign areas for the purposes of the FTR).

Internal Revenue bill of lading (IRBL) -- A contract using the actual expense method for transportation services between the United States (U.S.) Government and the carrier transporting the household goods, professional books, papers, and equipment (PBP&E), privately-owned vehicles (POV), and unaccompanied air baggage (UAB).

Official station -- The location where the employee regularly performs their duties. The geographic limits of the official station are the corporate limits of the city or town where the employee is located, or, if not in an incorporated city or town, the reservation, station or other established area having definite boundaries where the employee is located, not to exceed 50 miles from the employee's location. If the employee’s work involves recurring travel or varies on a recurring basis, the location where the work activities of the employee’s position of record are based is considered the regular place of work.

Permanent Change of Station (PCS) -- An assignment of a new appointee to an official station or the transfer of an employee from one official station to another on a permanent basis.

Relocation advance -- The prepayment of estimated relocation expenses to an employee with the expectation that the employee will account for amounts received by filing a relocation voucher.

Relocation authorizations -- The documents that authorize allowances on a relocation authorization for basic moving expenses and relocation authorization amendment for basic plus expenses, and other amendments for temporary quarters or any allowance not authorized on the original basic moving expense authorization that provide approval to relocate in the government's interest and are used to obligate relocation funds.

Relocation Income Tax Allowance (RITA) -- The payment to the employee to cover the difference between the withholding tax allowance (WTA), if any, and the actual tax liability incurred by the employee as a result of their taxable relocation benefits; Relocation Income Tax Allowance (RITA) is paid whenever the actual tax liability exceeds the WTA.

Relocation voucher -- Form 8741, Relocation Voucher, A written request for reimbursement of expenses supported by documentation and receipts incurred in the performance of a permanent change of station or temporary change of station, and for the liquidation of advances, if applicable.

Residence -- The one home from which an employee regularly commutes to and from work on a daily basis and which was their residence at the time an employee is officially notified by competent authority to transfer to a new official station.

Temporary Change of Station (TCS) --The relocation of an employee to a new official station for a temporary period while performing a long-term assignment, and subsequent return to the previous official station upon completion of that assignment.

Temporary Quarters Subsistence Allowance (TQSA) -- The Temporary Quarters Subsistence Allowance (TQSA) is an allowance provided to assist with temporary lodging, meals, laundry and dry cleaning while occupying temporary quarters at a new post and permanent residence is not yet available, or when an employee is getting ready to depart post of duty permanently and must vacate residence.

Temporary Quarters Subsistence Expenses (TQSE) -- The Temporary Quarters Subsistence Expenses (TQSE) is an allowance provided to reimburse actual subsistence expenses incurred by an employee and/or their immediate family while occupying temporary quarters. TQSE does not include transportation expenses incurred during occupancy of temporary quarters.

Transport -- A system or means of conveying people or goods from place to place by means of a vehicle, aircraft, or ship.

Withholding Tax Allowance (WTA) -- The amount provided by the agency to gross-up taxable relocation allowances, reimbursements or direct payments to a vendor to offset the federal tax withholding.

The following acronyms apply to this program:

Related Resources

Employees should review the following IRMs:

IRM 1.32.4, Government Travel Card Program, for information on the Travel Card Program and the Centrally Billed Government Travel Card Program

IRM 1.32.11, IRS City-to-City Travel Guide, for information on city-to-city travel, including domestic, foreign, invitational and emergency travel

IRM 1.32.13, Relocation Services Program, for information regarding the use of the relocation services contract

IRM 1.32.5, International Travel Office Procedures, for guidance on completing the necessary travel documents for international travel including the Form 1321, Authorization for Official Travel as well as visa and passport applications.

IRM 6.610.1, IRS Hours of Duty, for information on the use of administrative leave in connection with a government authorized relocation travel

Joint Federal Travel Regulations , for additional information on foreign and non-foreign OCONUS relocation

Publication 521, Moving Expenses , for additional information on the 50-mile distance and time test guidelines for moving expenses

Department of State Standardized Regulations (DSSR) for additional information on foreign and non-foreign OCONUS relocation.

Foreign Affairs Manual: United States (U.S.) Department of State , for additional information on foreign and non-foreign OCONUS relocation

Foreign Affairs Handbook - U.S. Department of State , for additional information on foreign and non-foreign OCONUS relocation

Delegation Order 1-3, Authorization of Employee Relocation Allowances and Approval of Relocation Reimbursements, for information on approval of relocation activities.

General Rules and Applicability

This section provides IRS guidance to supplement FTR Chapter 302, Subpart A, Part 302-1, General Rules .

The IRS may authorize the payment of relocation expenses to:

Attract qualified candidates willing to relocate

Attract a specific individual with a unique set of skills not easily found in the area

Accommodate a mandatory or directed reassignment

The rules governing the IRS ability to pay for relocation expenses for new and current employees are as follows:

The employee is transferring from one duty station to another for permanent duty and the new duty station is at least 50 miles from the old duty station. The distance test is met when the new official station is at least 50 miles further from the employee’s current residence than the old official station is from the same residence. For example, if the old official station is three miles from the current residence, then the new official station must be at least 53 miles from that same residence in order to receive relocation expenses for residence transactions. The distance between the official station and residence is the shortest of the commonly traveled routes between them. The distance test does not take into consideration the location of a new residence. This follows the distance guidelines found in Internal Revenue Service Publication 521, Moving Expenses. The business unit’s Deputy Commissioner (or the Chief of Staff for Commissioner direct-report organizations) may authorize an exception to the 50-mile threshold on a case-by-case basis.

The employee must sign a Form 4282, Twelve-Month-Service Agreement, for a domestic relocation (CONUS), a Form 10902, Overseas Transportation Service Agreement for a foreign (OCONUS) relocation or a Form 9803, Transportation Agreement for a non-foreign relocation (OCONUS).

Employees cannot incur any travel expenses prior to approval. The employee must begin their travel including transportation for the family and household goods after receiving an approved relocation authorization. All aspects of the relocation must be completed within one year from the report date of the transfer or appointment, including settlement of real estate transactions. The one-year limit can be extended for an additional year by the employee through their approving official. There is no authority to extend the relocation beyond the two years.

Relocation allowances are determined by the type of assignment as a new appointee, student trainee, transferee, overseas tour renewal employee, separating employee or an employee performing a temporary change of station.

The purpose of the relocation authorization is to:

Provide written approval authorizing the employee to incur relocation expenses.

Inform the employee of approved entitlements and allowances by listing the estimated amount for each allowance.

Obligate funds for relocation expenses.

Public Law 115-97 known as the "Tax Cuts and Jobs Act of 2017" was signed into law on December 22, 2017. The law suspended qualified moving expense deductions along with the exclusion for employer reimbursements and payments of moving expenses effective January 1, 2018, for tax years 2018 through 2025. Relocations that occurred prior to January 1, 2018, are still deductible.

The IRS has determined payment for extended storage of household goods for employees assigned to OCONUS locations will remain excluded from gross income and exempt from taxation. Additionally, transportation of an employee’s POV to, from and between the CONUS and a post of duty outside the continental United States, or between posts of duty OCONUS will remain excluded from gross income and exempt from taxation. Transportation of an employee’s POV within CONUS, however, will be included in the employee’s gross income and subject to tax liability for those payments.

Employees cannot relocate to the new official station before they have received an approved relocation authorization for basic moving expenses, before incurring permanent change of station (PCS) or temporary change of station (TCS). Employees must contact their assigned CFO relocation coordinator for assistance with entitlements and allowances for basic relocation allowances and basic plus relocation allowances.

The IRS has two relocation programs:

The basic relocation allowances program must be authorized on relocation authorization for basic moving expenses and approved by the business unit head of office or their designee as defined in Delegation Order 1-3, Authorization of Employee Relocation Allowances and Approval of Relocation Reimbursements. This authority may be redelegated, in writing, by the business unit head of office to the director, Strategy and Finance, or their equivalent.

The basic plus relocation allowances program must be authorized on the relocation authorization amendment and approved by the business unit head of office or their designee. The request is then forwarded to the Associate CFO for Financial Management for final approval. See IRM 1.32.13, Relocation Services Program, for additional information on requesting this program.

Relocating employees are entitled to all mandatory payments allowable under the basic relocation allowances program. The basic relocation allowances program includes mandatory allowances by move type as prescribed by the FTR:

En route travel to new POD for employees and immediate family

Miscellaneous expenses

Real estate transactions

Transportation of a mobile home or boat used as a primary residence in lieu of transportation of household goods

Transportation of household goods up to 18,000 pounds, with a 2,000 pound packing additive, and storage up to 60 days in a CONUS location or 90 days in an OCONUS location

Temporary storage for household goods may not exceed a total authorization of 150 days for CONUS locations or 180 days for OCONUS locations

Extended storage of household goods (for isolated official stations)

The Basic Relocation Allowances Program also includes discretionary allowances as prescribed by the FTR:

Househunting trip

Temporary Quarters Subsistence Expenses (TQSE) for up to 60 days

Extension of temporary quarters for an additional 60 days not to exceed a total of 120 days

Shipment of a POV to a foreign or non-foreign OCONUS location

Extension of temporary storage of household goods within CONUS – up to an additional 90 days not to exceed a maximum of 150 days and whenever there is an OCONUS origin or destination up to an additional 90 days not to exceed a maximum of 180 days

Under the Basic Plus Relocation Allowances Program, the IRS may pay the following additional relocation allowances:

Use of the relocation services contract

Shipment of a POV within CONUS

Employees must receive authorization for basic relocation allowances on, Relocation Authorization for Basic Moving Expenses, before requesting the basic plus relocation allowances on Relocation Authorization Amendment for Basic Plus Moving Expenses.

The business units must submit the request for basic plus relocation allowances to Travel Policy & Review, *CFO Relocation Basic Plus [email protected] mailbox for review. Travel Policy and Review will forward the request to the Associate CFO for Financial Management for approval or disapproval. The Associate CFO for Financial Management will return the package to Travel Policy and Review. Travel Policy and Review will provide copies of the approval or disapproval to the CFO relocation coordinator.

Relocation allowances are determined by the type of assignment as a new appointee, student trainee, transferee, overseas tour renewal employee, separating employee or employee performing a TCS.

Employees are required to use their government travel card for themselves and authorized family members, househunting trip and en route travel in accordance with the rules governing the mandatory use of the government travel card. Use of the government travel card for temporary quarters is encouraged but not required.

Employees must contact the Travel Management Center (TMC) to obtain transportation tickets for themselves and family members. Tickets may not be obtained from any other source.

Employees may contact one of the relocation coordinators for pre-transfer counseling. A list of the coordinators can be found on the relocation guidance website.

Information regarding a hardship relocation program can be found on the relocation guidance website, or by contacting the designated points of contact in the business unit.

In accordance with IRM 6.610.1.3.9(1), IRS Hours of Duty, employees who are authorized moving expenses are required to obtain management approval to be excused from duty for the purpose of completing certain relocation transactions. If activities associated with the relocation cannot be conducted outside the employee’s regular working hours, an employee may be granted excused absence to make arrangements and to transact personal business directly related to a permanent change in duty station. Such activities may relate to locating living quarters at the new POD (if a househunting trip was not authorized); sale of property; transportation and delivery of household goods; and securing utilities, driver's license and automobile tags. Excused absence may only be approved if the cost of relocation (travel and transportation of household goods) is paid by the IRS.

If a househunting trip is authorized, employees may be given a reasonable period of excused absence, up to 10 consecutive calendar days, that includes travel time.

Travel to the New Official Station Prior to the Report Date

The IRS requires the reporting date to be the date on which the employee physically reports for duty at their new official station. This date may be specified in the employee's service agreement. The reporting date will be the first day of the one-year time limit allowed to complete all applicable relocation activities. Effective transfer or appointment date will not always coincide with the reporting date.

Travel to the new official station prior to the report date may only occur if the travel assignment is determined to be distinct from the new assignment and can be legitimately classified as temporary duty travel, in which case the payment of per diem may be authorized. If the travel to the new official station is an integral part of the new assignment, payment of per diem is not allowed and the beginning date of the travel is considered the employee’s report date. The nature of the assignment may not be related to the new position.

Short Distance Moves

Relocation allowances for a short distance move, which is less than 50 miles from the old POD or residence, may only be authorized when it is determined by an IRS Deputy Commissioner to be in the best interest of the government with a written memorandum providing the exception. All reimbursable expenses for short distance moves are taxable income and cannot be waived.

Business units must submit a request to Travel Policy and Review when the travel and transportation expenses and applicable allowances in connection with the employee's transfer from their residence involves a distance of less than 50 miles within the same general local or metropolitan area. Travel Policy and Review will forward the request to an IRS Deputy Commissioner for approval or disapproval.

Employee Eligibility Requirements

This section provides IRS guidance to supplement FTR Chapter 302, Relocation Allowances, Subpart A, Part 302-1, General Rules , and 302-2, Employee Eligibility Requirements , including:

Service agreements

Time limits

Advance of funds

Service Agreements

A service agreement is a written agreement between the employee and the IRS, signed by the employee and an approving official, stating that the employee will remain in the service of the government for a period of time as specified in after the employee has relocated.

There are three types of service agreements:

Form 4282, Twelve-Month Service Agreement, (for domestic travel) - A written agreement between IRS and the employee that they will remain within the service of the government for a period of twelve months, after they have relocated; and includes a duplicate reimbursement statement that the employee nor an immediate family member has not received any other relocation benefits from another source.

Form 10902, Overseas Transportation Agreement, (for foreign OCONUS travel) - allows the employee to remain at that POD for a period of two years from the date the employee arrives, unless the employee's tour is interrupted for a reason beyond the employee's control and acceptable to the IRS. If the employee extends their two-year period, they must sign the tour renewal portion of the form in order to continue to receive allowances until they return to their U.S. post of assignment.

Form 9803, Transportation Agreement, (for non-foreign OCONUS travel) - requires the employee to remain at that POD for a period of two years from the date the employee arrives, unless the employee's tour is interrupted for a reason beyond the employee's control, and acceptable to the IRS. If the employee extends their two-year period, they must also sign the tour renewal portion of the form in order to continue to receive allowances until they return to their U.S. post of assignment.

The applicable service agreement must be signed by the employee, prior to the approving official signing the Relocation Authorization for Basic Expenses. Employees and their immediate family members may incur expenses after the signed document has been forwarded to the employee.

Employees will be penalized if they separate from the government before completing the service agreement, unless the IRS Commissioner determines that the reasons for the separation were beyond the employee's control and are acceptable to the IRS.

If an employee is separated from the government before completing one year of an agreed tour of duty, under circumstances that appear to be beyond their control, the facts should be presented to the Commissioner. If the Commissioner determines that the separation was beyond the employee’s control and acceptable to the IRS, the employee will be relieved of all indebtedness normally arising from the early separation. A copy of such memorandum of acceptance, stating that the expense of return travel and transportation will be allowed and the reasons therefore, shall be submitted to the *CFO Relocation Basic Plus [email protected] for review. The IRS Commissioner will return the request back to Travel Policy and Review. Travel Policy and Review will provide the approval or disapproval request to the business unit and the CFO relocation coordinator electronically via email.

If employees receive reimbursement for any claimed expense from another source in error, they will be required to repay the duplicate reimbursement to the IRS by submitting the payment to: Beckley Finance Center ATTN: Debt Collection Unit P.O. Box 9002 Beckley, WV 25802-9002  

Time Limits

The employee is authorized to begin their travel, including transportation for the family and household goods after receiving an approved relocation authorization. At no time may an employee incur any travel expenses prior to approval. All aspects of the relocation must be completed within one year from the report date of the transfer, including settlement of real estate transactions. The one-year limit may be extended for an additional year by the employee through their appropriate business unit approving official. Additional extensions beyond the two years may not be approved.

The IRS may authorize a one-year extension, if extenuating circumstances exist including, but not limited to:

Inability to obtain financing

Absence from official station for extended periods of time

Inadequate housing to meet family needs

Employees must submit a written request to the business unit head of office or director, Strategy and Finance, no later than 60 days before the one-year expiration date if they require additional time to complete their relocation activities.

The business unit must approve the employee’s extension and contact the CFO relocation coordinator 60 days before the expiration of the one-year limitation.

Advance of Funds

To receive a relocation advance employees must have:

A signed service agreement

An approved Relocation Authorization for Basic Moving Expenses

An approved Form 4253-C, Relocation Travel Advance Request

Advances should be kept to the minimum amount needed to cover the employee’s needs, but no more than 75% of the estimated reimbursable expenses expected to be incurred.

As a transferee, employees may receive advances for the following:

When travel and transportation to an official station are authorized for a new appointee or student trainee, the IRS may advance funds to cover cash expenditures expected for reimbursable travel expenses, as follows:

Relocating employees may use their government travel card, if applicable, to obtain advances using an automated teller machine. If an employee does not have a government travel card, the employee should complete Form 4253-C, Relocation Travel Advance Request, to request a relocation advance. Use of the travel card for temporary quarters is encouraged but not mandatory.

Employees must apply for separate advances to cover allowed expenses for househunting, en route travel, temporary quarters, and shipping and storage of household goods. Requests for advances should be submitted two weeks before an employee anticipates incurring a relocation expense.

Employees must complete an advance request Form 4253-C, Relocation Travel Advance Request, and submit by email or postal mail to: Beckley Finance Center ATTN: Relocation Unit P.O. Box 9002 Beckley, WV 25802-9002 Email -*[email protected] Employees cannot use the IRS electronic travel system to request relocation advances or to enter relocation expenses.

If the transfer is cancelled, postponed or the service agreement is violated, the advanced amount must be returned immediately.

Advances for regular travel cannot be mixed with relocation advances.

Employees must submit a relocation voucher within 15 calendar days of completing or cancelling any of the relocation activities and liquidate the outstanding advance.

Relocation Allowances by Specific Type

This section provides IRS guidance to supplement FTR Chapter 302, Relocation Allowances, Part 302-3, Relocation Allowance by Specific Type , including:

New appointee

Transferred employees

Overseas tour renewal

Senior Executive Service (SES) separations for retirement (Last Move Home)

Return separation

New Appointee

The relocation allowances available to new appointees are as follows:

Transferred Employees

When authorized, the IRS will pay or reimburse the following allowances for transferred employees:

Table A: Transfer Between Official Stations in CONUS

Table B: Transfer from CONUS to Foreign or Non-Foreign OCONUS Official Station

Table C: Transfer from Foreign or Non-Foreign OCONUS Official Station to an Official Station in CONUS

Table D: Transfer Between Foreign or Non-Foreign OCONUS Official Stations

Table E: Return from Foreign or Non-Foreign OCONUS Official Station to Place of Actual Residence for Separation

Table F: Tour Renewal Agreement Travel

Residence transaction expenses (lease termination expenses) apply when an employee is transferred in the interest of the government to a different non-foreign area official station instead of being returned to the former non-foreign area official station.

Column 2, item 1a : Allowed for transfers to a non-foreign OCONUS location.

Column 1, item 2: A TQSA under the DSSR may be authorized preceding final departure subsequent to the necessary vacating of residence quarters. Column 1, item 4: Allowed when the old and new official station are located in the United States. Also allowed when instead of being returned to the former non-foreign OCONUS area official station, an employee is transferred in the interest of the government to a different non-foreign OCONUS area official station from which transferred when assigned to the non-foreign official station. Column 1, item 4: Also allowed when instead of being returned to the former CONUS area official station, an employee is transferred in the interest of the government to a different CONUS official station

Overseas Tour Renewal Travel

Overseas tour renewal travel is reimbursement for the employee and their immediate family of round trip travel and transportation expenses between the overseas post of duty and the employee actual place of residence in the U.S.

Employees and their immediate family members are entitled to overseas tour renewal travel expenses that may include rest and recuperation travel or home leave travel. The reimbursement will be limited to transportation cost only.

The approving official must sign Section A of Form 10902, Overseas Transportation Service Agreement, for a foreign transfer or Form 9803, Transportation Agreement, if the employee is moving to a non-foreign POD and the employee must sign Section B of the form after completion of each tour renewal, either continuing with the current tour or beginning a new tour. A copy of the form should be submitted to the CFO relocation coordinator and maintained by the employee for their personal records.

Employees must submit Form 13635, Manual Travel Authorization, prior to travel to receive reimbursement for overseas tour renewal travel and submit Form SF1012, Manual Travel Voucher, within five business days after completion of the trip.

Employees must immediately provide the CFO relocation coordinator with their actual place of residence within CONUS for future tour renewal travel.

Employees who are on an overseas assignment and have signed a new service agreement or tour renewal to remain at the overseas post or to transfer to another overseas post will be authorized to continue extended storage and property management services at no expense to them.

Senior Executive Service (SES) Separation for Retirement Last Move Home

SES employees must contact their assigned CFO relocation coordinator to request authorization for their separation retirement relocation expenses on Relocation Authorization for Basic Moving Expenses. The request must include:

The tentative moving dates

The origin and destination of their planned move

A copy of their eligibility letter for SES separation retirement last move home benefits

As an eligible SES career appointee who meets the conditions for a separation retirement may be reimbursed for relocation expenses which include the following:

Upon separation, if the employee elects to reside in a different geographical area which is less than 50 miles from the official station, they will not receive reimbursement.

Employees should request their Relocation Authorization for Basic Moving Expenses, within six months prior to the date of separation and begin their relocation activities no later than six months after their date of separation. All last move home activities must be completed within one year of the date of separation.

If an employee dies before the separation retirement travel is completed, the IRS pays moving expenses for the family even if the family chooses a different destination other than the one chosen by the employee.

Employees may not receive a travel advance for a last move home.

Temporary Change of Station (TCS)

A TCS is a relocation to a new official station for a temporary period while performing a long-term assignment, and subsequent return to the previous official station upon completion of that assignment.

Employees may be reimbursed the following allowances for temporary change of station:

The IRS will not pay for residence transaction expenses for a TCS move. However, the IRS will pay for property management services if approved by the Associate CFO for Financial Management.

Return Separation

Return separation occurs once the employee has completed the duty OCONUS as specified in the service agreement, IRS must pay one-way transportation expenses for the employee, for the family member(s) and for the household goods.

An employee qualifies for a return separation at government expense when the employee successfully completes a tour of duty at an OCONUS post of duty as specified in the original service agreement which the employee signed when transferred.

When the employee has completed an OCONUS tour as specified in the service agreement, IRS must pay one-way transportation expenses for the employee and family member(s), per diem for the employee only, transportation and temporary storage of household goods and shipment of POV when authorized.

Allowances for Subsistence and Transportation Expenses

This section provides IRS guidance to supplement FTR Chapter 302, Part 302-4, Allowances for Subsistence and Transportation including:

Travel expenses

Per diem at new official station

Use of more than one POV for en route travel

Travel Expenses

The IRS will pay for an employee’s transportation expenses for the authorized mode of travel that is determined to be the most advantageous to the government. If the employee travels by any other mode, the IRS will pay the employee’s transportation expenses, not to exceed the cost of transportation expenses by the authorized mode. En route mileage for travel begins at the residence at the old post of duty and ends at the temporary quarters or permanent residence at the new post of duty.

The employee must use their government travel card or the centrally billed account (CBA) for transportation costs for themselves and their immediate family members.

Employee per diem for en route relocation travel between the old and new official stations is limited to the standard CONUS rate which can be found on the GSA website.

The travel regulations prohibit reimbursement of meals and incidental expenses (M&IE) unless travel is in excess of 12 hours and 300 miles for en route travel.

Per Diem at New Official Station

Per diem for en route travel ends, whether the arrival is prior to or subsequent to the date on the approved relocation authorization. However, an employee may be entitled to receive reimbursement of actual expenses up to the maximum calculation of per diem allowances for temporary quarters when they arrive at the new official station, if authorized.

An employee detailed to duty at a temporary duty location (TDY) location is not entitled to per diem at such place on and after the date they received notice, formal or informal, that the temporary station was to become the permanent official station. The employee should immediately return to the old official station and begin their relocation.

Employees cannot receive per diem at a TDY location when it becomes their permanent official station.

Employees may receive per diem to return to the old official station, when they are detailed to a TDY location after the IRS designated the TDY location as the permanent official station. Employees are allowed per diem for a round trip between the new and old stations to handle personal matters related to the transfer or to complete unfinished work. The trip home is temporary duty travel and the voucher should be filed in the IRS electronic travel system.

Use of More Than One Privately-Owned Vehicle (POV) for En Route Travel

Employees can be authorized to use more than one POV to perform en route travel to the new official station under certain situations.

The maximum number of POVs that the approving official can authorize for en route travel is limited to the number of authorized licensed drivers, including the employee and immediate family members. The approving official may authorize the use of more than one POV if the employee meets one of the following circumstances:

One POV cannot reasonably transport the entire family together with luggage.

A family member's age or physical condition requires special accommodations.

The employee must report in advance of the family, who remains at the old official station to sell the residence, ship household goods, complete the school term or adequate housing is not available at the new official station.

A member of the family performs travel between points other than those of the employee's travel.

In advance of the employee's travel, the family must travel to the new official station for acceptable reasons, such as enrolling children in school at the beginning of the term.

The use of more than one POV for en route travel must be authorized in advance on Relocation Authorization for Basic Moving Expenses by the approving official.

Check the GSA website for the most recent mileage rates when relocation travel is performed by POV.

Allowance for Househunting Trip Expenses

This section provides IRS guidance to supplement FTR Chapter 302, Relocation Allowances, Part 302-5, Allowance for Househunting Trip Expenses , including:

The IRS may authorize only one round trip for the employee and/or spouse in connection with a particular transfer.

The applicable per diem rate for a househunting trip is the standard CONUS rate if the actual expense method is chosen.

The approving official can authorize the mode of transportation that provides the minimum time en route and maximum time at the new official station, as follows:

Expenses for reasonable local transportation costs including common carrier, local transit, rental car or a POV at the location of the new official station when househunting are allowed. When the new official station is less than 250 miles from the employee's old station, the approving official must authorize travel by POV, unless there are compelling reasons for not using a POV that are acceptable. (For example, employee is physically impaired, does not own or lease a POV and has only the POV that is used for family transportation or the POV is not road worthy for such a trip).

Expenses incurred by driving a POV will be limited to the constructive costs of common carrier for trips of 250 miles or more.

Expenses for the use of a taxi are limited to transportation to airports, or other carrier terminals, and places of lodging and may not be used to seek permanent residence.

Expenses for rental cars may be authorized; however, the rental car cannot be used for personal travel and the approving official may impose limitations on the total mileage reimbursed. Family members are not covered under the government rental car agreement, therefore, they are considered unauthorized drivers/passengers, and will not be insured by the government. IRS will not reimburse the cost of additional insurance purchased by the employee to cover authorized family members.

A one-way househunting trip is a trip to seek permanent living quarters after arrival in the local commuting area of the new official station, but before reporting to the office to work at the new assignment. When performing a one-way househunting trip, IRS considers all expenses for travel to the new official station as househunting expenses rather than en route travel.

Employees and their spouses may choose to complete a one-way househunting trip if time does not permit a round trip to seek permanent living quarters. The IRS will not reimburse employees for any househunting trip expenses incurred after the employee reports to their new official station and begins performing any work related to their new assignment. However, if the employee’s spouse continues to seek permanent living quarters after the employee reports, the employee may receive reimbursement for the spouse’s expenses in support of househunting not to exceed 10 consecutive days.

For a lump-sum househunting trip, the expenses are reimbursed as follows:

If an employee performs a househunting trip and their spouse does not, or if their spouse performs a househunting trip and the employee does not, multiply the applicable locality per diem rate by 5.00 (see https://www.gsa.gov/perdiem ).

If an employee and their spouse perform a househunting trip, together or separately, multiply the applicable locality per diem rate by 6.25 (see https://www.gsa.gov/perdiem).

Allowance for Temporary Quarters (TQ) Subsistence Expenses

This section provides IRS guidance to supplement FTR Chapter 302, Relocation Allowances, Part 302-6, Allowance for Temporary Quarters Subsistence Expenses , including:

Temporary quarters (TQ) refers to lodging obtained from private or commercial sources to be occupied temporarily (with the intent of moving to permanent quarters at a later date) by the employee and/or members of their immediate family who vacated the residence in which they were residing at the time the transfer was authorized.

If authorized, an employee and their immediate family can occupy TQ for a period not to exceed 60 days. The approving official may approve extensions in 30 day increments, for an additional period of up to 60 days, for the occupancy of TQ where there is a compelling reason which is an event that is beyond the employee’s control and is acceptable by the IRS (for example, sudden illness, delayed delivery of household goods, inability to secure a permanent residence), or a demonstrated need for the additional time). The maximum period of time for TQ occupation is 120 days. The TQ may be utilized at the old official station and/or the new official station as long as it does not exceed the maximum period approved.

If the employee's immediate family members will be arriving at the new official station after the employee has entered TQ, the TQ period begins when the employee or any members of their immediate family initially enter TQ and the time shall run concurrently. For example, if the employee enters TQ on June 1, and their immediate family enters TQ at another location on July 1. The TQ period started June 1, for the employee and their immediate family. When the employee TQ period expires, it expires for their immediate family members as well. Employees have the option of beginning TQ alone or at the time their family vacates the old residence.

If the employee needs to occupy TQ more than 60 days, they must request an extension of TQ. They must contact their CFO relocation coordinator for assistance. All extension requests must be requested and approved by the employee’s business unit approving official.

Employees can obtain lodging from family and friends for TQ, however, the IRS will not reimburse employees the standard CONUS rate for lodging when obtaining TQ with family and friends. The IRS reimburses for the additional costs the host incurs in accommodating the employee, such as increased water or electric bills, if the employee is able to substantiate the costs. The IRS will not reimburse the employee for the cost of comparable conventional lodging in the area or a flat rate amount. The employee's host must provide proof of increased costs.

The IRS can reimburse an employee for meals when obtaining lodging from family and friends. The IRS will reimburse the employee the lower of the employee’s actual itemized daily meal costs or up to the maximum allowable amount for the employee and the authorized family members who are occupying TQ with the employee. The maximum calculation is based on the standard CONUS rate and is reduced after the first 30 days of the TQ period.

The IRS can reimburse an employee the cost of other types of lodging when there are no conventional lodging facilities in the area. For example, in remote areas or when conventional facilities are in short supply, because of an influx of attendees at a special event, such as the World’s Fair or international sporting event. Examples of such lodging include:

Military housing

College dormitories

Similar facilities or rooms that are not offered commercially, but made available to the public by area residents

Expenses for permanent quarters or TQ which become permanent are not reimbursable. If the TQ become the employee’s permanent residence, the IRS will consider the following factors to determine if reimbursement of TQ may be allowed:

Duration of lease

Movement of household effects into TQ

Expressions of intent

Attempts to secure a permanent dwelling

Length of time employee occupies TQ

Employees cannot claim expenses for a rental vehicle while in TQ. The IRS will not reimburse employees for expenses for local transportation expenses at the new post of duty as these are considered commuting cost and not reimbursable relocation expenses. This includes parking fees. If a vehicle is necessary to perform the duties required by the position, such as traveling from the job site to a temporary duty location on a daily basis, the approving official may authorize car rental expenses under local travel guidelines. See IRM 1.32.1, Official IRS Local Travel Guide.

The IRS does not offer a lump sum reimbursement for TQSE.

Employees cannot claim temporary quarter’s subsistence while they are on personal travel. Employees must include the day(s) they are away from the new official station for personal reasons on Form 4702, Temporary Quarters Subsistence Expenses for Thirty Days (30 Days). If employees sign a month's lease and they can provide a receipt for the applicable period, they are entitled to the full lodging expenses. M&IE for the day(s) away from the new station are not reimbursable.

Employees calculate the maximum reimbursement allowed under the actual TQSE method by multiplying the number of days in a period (normally 30) that they incur TQSE by the applicable per diem rate for the employee and each family member based on the following chart:

*Unaccompanied spouse or domestic partner occupies TQ in a location separate from the employee.

Employee’s actual expenses must be itemized daily.

Employees should consider the following to determine their maximum authorized TQSE allowance:

Expenses for actual subsistence that are directly related to the occupancy of the TQ.

Expenses for the cost of lodging, meals, groceries, and other items. Other items include tips for meals, laundry and dry cleaning, utilities, furniture rental, telephone service (not installation), cable service, and internet charges when used for official business (not installation).

Expenses for a flat rate for M&IE are not acceptable for reimbursement.

Employees can claim both groceries and meals as part of their M&IE expenses.

Reimbursable grocery items include, but are not limited to the following:

Ready-to-eat foods

Raw, canned, and frozen foods

Cooking oil and condiments

Dishwashing detergent, bathroom cleanser, toilet paper and soap

Baby food and baby formula

Paper plates, napkins and paper towels

Disposable eating utensils

Alcoholic beverage (i.e. beer and wine) and pet related food/items are non-reimbursable as groceries

Items purchased as groceries must be used or consumed while occupying TQ. Any amount claimed must be reasonable and in proportion to the length of time employees occupy TQ. The IRS will not reimburse employees for groceries purchased for use after the TQ expires. Employees should pay separately for personal expense items so that receipts submitted for reimbursement do not include non-reimbursable or unauthorized items.

Employees must submit copies of all grocery receipts and any other reimbursable expenses, such as, an individual meal or dry cleaning that is $75 and over. Receipts are required for all lodging expenses, utilities and furniture rentals. A copy of the lease (if applicable) is required for reimbursement.

Employees may use the government travel card to pay for TQSE. Use of the government travel card for TQ is not mandatory.

Employees are entitled to TQ before departing to an overseas post of duty. The IRS may authorize reimbursement:

If employees are departing a POD in the U.S. for an OCONUS foreign post, employee may be granted up to 10 days of pre-departure subsistence. The reimbursement will be based upon the U.S. locality rate. (See DSSR, section 242.2)

If employees are departing a post in the U.S. for an OCONUS non-foreign post, employee may be granted a TQSE allowance. The reimbursement will be based on the standard CONUS per diem rate.

Employees are entitled to 60 days temporary quarters upon arrival at the new overseas post of duty.

For the lump sum TQSE payment method, the employee is paid a lump sum for each authorized day up to 30 days. The maximum number of days that may be used for the TQSE lump sum calculation is 30 and no extensions are allowed when using the lump sum payment method.

The lump sum calculation is as follows:

For the employee, multiply the number of TQSE days authorized by the agency by .75 times the maximum per diem rate for the locality where TQ will be occupied. For non-foreign OCONUS, the Department of Defense Per Diem, Travel and Transportation Allowances Committee establishes the per diem rate, and for foreign OCONUS, the Department of State establishes the per diem rates.

For each member of the immediate family, multiply the same number of days by .25 times the same per diem rate, as described in paragraph (a) of this section.

The lump sum payment will be the sum of the calculations in paragraphs (a) and (b) of this section.

Transportation and Temporary Storage of Household Goods, and Professional Books, Papers, and Equipment, and Baggage Allowances

This section provides IRS guidance to supplement FTR Chapter 302, Relocation Allowances, Part 302-7, Transportation and Temporary Storage of Household Goods, Professional Books, Papers, and Equipment, and Baggage Allowance , including:

Actual expense method

UAB allowance

Temporary storage of household goods

Household goods traffic management program

The authorized methods for transportation, movement and temporary storage of household goods include actual expense method and do-it-yourself moves. Contact the CFO relocation coordinator for assistance.

The maximum weight allowance of household goods that may be shipped and/or stored at government expense is 18,000 pounds net weight. A 2,000 pound allowance is added to the 18,000 pounds net weight allowance to cover packing materials for the shipment. Under no circumstances should a shipment weigh over 20,000 gross pounds (the 18,000 pounds net weight of the household goods plus the 2,000 pound allowance for packing materials). The relocating employee is responsible for reimbursing the government for all costs incurred if the shipment is overweight. Employees are responsible for any additional cost if they have their household goods transported and/or stored and the combined weight exceeds the 18,000 pounds net weight (20,000 pounds including packing materials) limitation.

Employees may ship their household goods and professional books, paper, and equipment (PBP&E) from more than one origin point and/or to more than one destination point. The amount that the IRS will reimburse is limited to the cost of transporting the household goods and PBP&E in one lot not to exceed 18,000 pounds net weight from the authorized origin to the authorized destination. Under the actual method, the IRS will pay the mover for the entire invoice. Employees are required to reimburse the IRS for charges that result from shipping more than one lot from any unauthorized origins to any unauthorized destinations. The household goods carrier prepares a cost comparison between the authorized route and the route requested by the employee.

Authorized employees may ship their PBP&E in a separate lot, as an administrative expense, if their weight for household goods exceeds 18,000 pounds net weight.

Employees must file a claim directly with the carrier that transported the household goods for any loss or damages. They must contact the carrier within 75 days from the date of delivery to notify them of any loss or damage and to request a claim form. The carrier is required to acknowledge all claims within 10 calendar days after receipt of a properly completed form. The negotiation and settlement of the employee's claim is between the employee and the carrier.

Federal, state and local laws or carrier regulations may prohibit common carrier shipment of certain articles. These articles frequently include:

Hazardous articles such as: explosives, flammable and corrosive materials, and poisons.

Items that cannot be taken from the premises without damage to the item or premises.

Perishables including frozen foods, items requiring refrigeration or perishable plants unless: 1. The item is shipped less than 150 miles. 2. The item requires no storage. 3. The item requires no preliminary or en route services by the carrier such as watering or other preservative method.

The IRBL provides full value protection service at no additional cost to the employee. The basis for the full value protection service is $6 per pound multiplied by the net weight of the shipment. Employees may obtain additional value protection at their own expense from the carrier.

Actual Expense Method

The IRS assumes responsibility for awarding the contract and paying the carrier transporting household goods, PBP&E and temporary storage using an IRBL. The CFO relocation coordinator is responsible for making all the necessary arrangements for transporting household goods, PBP&E and temporary storage including, but not limited to:

Packing/unpacking

Crating/uncrating

Pickup/delivery including debris pickup within 30 days of delivery

Employees must pay the carrier directly if they sign a separate contract using the actual expense method in addition to the IRBL.

Employees are responsible for charges of excess weight for household goods under the actual expense method. The IRS pays the total charges and will bill employees for the cost of transportation and other charges applicable to any excess weight.

Employees must reimburse the IRS for charges assessed if and when:

The weight of the household goods exceeds the maximum pounds allowed.

There are disallowed household goods items and restricted articles transported by the carrier.

There are debris pick up charges, if requested, within 30 days of delivery.

There are days of storage in excess of the authorized number of days.

There are additional valuations of household goods.

There are additional charges incurred for shipments originating and/or terminating at locations other than the authorized points of origin and destination.

There are storage access fees.

There are other charges that the employee may be responsible to pay the carrier when the IRS determines that the employee’s actions produced unnecessary expenses. Employees must discuss any unexpected or unusual circumstances as soon as possible with the carrier and the CFO relocation coordinator to prevent additional expenses. Examples of conditions include:

Expedited pickup or delivery services – The carrier must provide service between 8 AM and 5 PM, Monday through Friday, excluding U.S. holidays. However, if employees require service outside of these hours and the employee, the carrier, and the IRS do not agree in writing, the employee will be responsible for the charges.

Carrier waiting time caused by employee – IRS does not reimburse for charges if the employee or their representative are not present at the agreed upon time for the packing, pick up and delivery of household goods. The employee must immediately contact the carrier if they cannot be present at the appointed time to avoid additional fees.

The IRS will pay for an extra stop for charges assessed for one origin pick up and one destination delivery.

Unaccompanied Air Baggage (UAB) Allowance

Employees and their authorized immediate family members are entitled to UAB allowance if the employee is transferred to an OCONUS location. The UAB allowance is up to 350 pounds each for the employee and authorized family members ages 12 and above. Authorized family members under age 12 receive up to 175 pounds each.

The employees should contact the CFO relocation coordinator for assistance when requesting UAB allowance.

Temporary Storage of Household Goods

The employee's initial allowance for temporary storage of household goods within CONUS is 60 days and OCONUS is 90 days.

Upon written request, the initial temporary storage period may be extended within CONUS an additional 90 days for a total of 150 days under certain circumstances when approved by the authorizing official.

Upon written request, the initial temporary storage period may be extended OCONUS for up to an additional 90 days for a total of 180 days under certain circumstances when approved by the authorizing official.

Employees in training at Federal Law Enforcement Training Center (FLETC) will receive initial temporary storage not to exceed 180 days due to the length of the training class.

Employees should contact the CFO relocation coordinator for assistance for requesting an extension to temporary storage under the Basic Relocation Allowances Program. All extensions for temporary storage must be requested and approved by the employee’s business’s unit approving official.

Household Goods Traffic Management Program

GSA’s Centralized Household Goods Traffic Management Program (CHAMP) assists relocating federal civilian government employees in transporting household goods from one official duty station to another, both domestically and internationally.

The CFO relocation coordinator will assign a mover within the GSA CHAMP program to perform a pre-move survey, pack, load, ship and store the household goods based upon the transferee’s individual needs.

Allowances for Extended Storage of Household Goods

This section provides IRS guidance and instructions to supplement FTR Chapter 302, Part 302-8, Allowances for Extended Storage of Household Goods including:

Extended storage during assignment to isolated locations within CONUS

Extended storage during assignment OCONUS

Extended Storage During Assignment to Isolated Locations Within the Continental United States (CONUS)

An official station at an isolated location is a place of permanent duty assignment in CONUS at which the employee has no alternative except to live where the employee is unable to use their household goods.

The IRS Commissioner is responsible for designating an official station as isolated to allow extended storage of household goods at the IRS expense. Employees should contact their assigned CFO relocation coordinator for assistance.

Extended Storage During Assignment Outside the Continental United States (OCONUS)

The authorized time period for extended storage of household goods is the duration of the assignment.

Extended storage may begin 30 days before the tour begins and end 60 days after the tour is completed.

Extensions may be authorized by the approving official for subsequent service or tours of duty at the same or other overseas stations if: 1. The official station is one where the employee is not authorized to take or use the household goods. 2. The extended storage is in the public's interest. 3. The estimated cost of extended storage would be less than the cost of round trip transportation and temporary storage of the household goods to the employee's new official station.

When eligibility ceases, storage at the IRS expense may continue until the beginning of the second month after the employee’s tour at the official station OCONUS terminates. To avoid inequity to the employee for additional expenses, the approving official may extend the period for storage at their discretion depending on the employee’s circumstances.

Shipment is synonymous with transportation as used in the FTR 302, Relocation Allowances .

Allowances for Transportation and Emergency Storage of a Privately-Owned Vehicle (POV)

This section provides IRS guidance and instructions to supplement FTR Chapter 302, Relocation Allowances, Part 302-9, Allowances for Transportation and Emergency or Temporary Storage of a Privately Owned Vehicle , including:

Transportation of a POV to a OCONUS post of duty

Return transportation of a POV from a OCONUS post of duty

Transportation of a POV within CONUS

Emergency storage of a POV

The purpose of the POV shipment allowance is to:

Reduce the government's overall relocation costs by allowing transportation of a POV to the employee's official station, within CONUS or OCONUS, when it is advantageous and cost effective.

Improve the overall effectiveness of an employee who is transferred or otherwise reassigned to a post of duty when it is in the government's interest for the employee to have use of a POV at the new official station.

Transportation of Privately-Owned Vehicle (POV) to an Outside the Continental United States (OCONUS) Post of Duty

In deciding whether to authorize transportation of a POV to a foreign OCONUS or a non-foreign OCONUS post of duty, the IRS must consider if:

The conditions at the employee's new post of duty warrant use of a POV

The use of the POV involved is suitable to local conditions at the new post of duty

The use of the POV will contribute to the employee's effectiveness on the job

The cost of shipping the POV to and from the post of duty will be excessive considering the time the employee has agreed to serve

The approving official can authorize transportation of one POV to a foreign OCONUS or a non-foreign OCONUS post of duty in accordance with the rules for the OCONUS location.

The approving official cannot authorize the employee a rental car while they wait for the arrival of their POV at the new OCONUS duty location. There are no provisions for this type of expense under the IRS relocation policy.

Return Transportation of a Privately-Owned Vehicle (POV) From an Outside the Continental United States (OCONUS) Post of Duty

The IRS will pay transportation costs to return the POV from the OCONUS post of duty, if the employee was authorized to ship a POV to an OCONUS post of duty. If the employee did not ship a POV, then the employee should contact their assigned CFO relocation coordinator for assistance.

Transportation of a Privately-Owned Vehicle (POV) Within the Continental United States (CONUS)

Shipment of a POV is a discretionary allowance that requires prior approval. The IRS must consider the following to determine whether to ship a POV within CONUS:

The cost of traveling by POV

The cost of transporting the POV

The cost of travel if the POV is transported

The productivity benefit derived from the employee’s accelerated arrival at the new station

The POV is in operating order, legally titled and tagged for driving

The distance to drive is 600 miles or more

Employees may transport up to two POVs within CONUS to the new duty station provided each transportation is advantageous and cost effective to the IRS. Employees must complete Form 13378, IRS Relocation Cost Comparison, and Form 14564, Request for Approval of Basic Plus Relocation Allowance Shipment of POV. All requests for shipment of POV within CONUS must be approved by the Associate CFO for Financial Management. The general rule is for the employee to fly to the new post of duty. If the employee must drive then the spouse must fly to the new post of duty.

Emergency Storage of a Privately-Owned Vehicle (POV)

The IRS will only reimburse for storage when an employee receives a notice to evacuate their immediate family and/or household goods from their OCONUS post of duty, employees may store their POV at a place determined to be reasonable by the IRS whether or not the POV is already located at, or being transported, to the post of duty.

The IRS will reimburse all necessary emergency storage expenses for a POV including, but not limited to:

Preparing the POV for storage and for use after storage.

Local transportation to and from point of storage.

Employees may ship and store, under emergency circumstances, a passenger automobile, station wagon, light truck or any other similar vehicle that will be used primarily for personal transportation.

Employees may not ship or store a trailer, airplane or any vehicle intended for commercial use.

Employees may receive an advance of funds for shipment and emergency storage of a POV not to exceed the estimated shipment and storage costs. However, they may not receive an advance if the POV is shipped by a government bill of lading.

Allowances for Transportation of Mobile Homes and Boats Used as a Primary Residence

This section provides IRS guidance and instructions to supplement FTR Chapter 302, Relocation Allowances, Part 302-10, Allowances for Transportation of Mobile Homes and Boats Used as a Primary Residence , including:

In lieu of transportation of household goods at government expense, employees may be entitled to an allowance for transportation of their mobile home or houseboat within CONUS, Alaska and through Canada en route between Alaska and CONUS. Employees must provide a written statement to their assigned CFO relocation coordinator that the mobile home or houseboat is their primary residence.

Employees must provide a detailed receipt from the mover after transporting their mobile home or houseboat.

Allowances for Expenses Incurred in Connection with Residence Transactions

This section provides IRS guidance and instructions to supplement FTR Chapter 302, Relocation Allowances, Part 302-11, Allowances for Expenses Incurred in Connection with Residence Transactions , including:

Title requirements

Request for reimbursement for residence sale and purchase

Employees must be occupying their residence at the time they are notified of the transfer to be reimbursed for expenses incurred for residence transactions.

Employees may place their property on the market any time after the Relocation Authorization for Basic Moving Expenses, has been approved.

The IRS will reimburse employees for expenses related to direct sale not to exceed:

10% of the actual sale prices for the employee's residence at the old duty station.

5% of the actual purchase price of the employee's residence at the new duty station.

Employees who are marketing their home independently must include the following clause in the listing agreement or as an attachment to the listing agreement. This is to protect employees in the event that they decide to use the Relocation Services Program. (See IRM 1.32.13, Relocation Services Program for additional information on marketing requirements and use of the Relocation Services Program). Failure to include the exclusion clause in the listing agreement could make the employee liable for a non-reimbursable brokerage commission.

If the sale of land is in excess of that required for the employee's residence site, the employee will be limited to reimbursement for a pro rata share of expenses covering the acreage of what is reasonably related to the residence site.

Employees can only claim reimbursement for one real estate transaction at the old station for either the cost of settling a lease or the sale of a residence.

Title Requirements

The title or interest in property must be in the employee's name and/or that of an immediate family member.

If the employee or a member of their immediate family does not hold full title to the property for which they are requesting reimbursement, the employee, will be reimbursed on a pro rata basis to the extent of the employee's equitable title interest in the residence.

Request for Reimbursement for Residence Sale and Purchase

To request reimbursement for residence sale and purchase expenses the employee incur for residence transaction, the employee send the claim for reimbursement and documentation of expenses to the approving official for review and approval.

Employees must submit the following forms for reimbursement of any real estate transactions:

Form 8741, Relocation Voucher

Form 4527, Employee Application for Reimbursement of Expense Incurred Upon Sale and/or Purchase of Residence, along with any receipts and documents pertaining to the sale or purchase of real estate

Closing Disclosure

Receipts for allowable expenses paid outside of closing

Sale contract or purchase contract

All items a through e must be submitted to the *[email protected] for processing.

Employees should submit their claim(s) within 15 calendar days after the completion of the sale of the former residence and for expenses incurred in the purchase of a new residence.

When there is a discrepancy between the employee's claimed amount for reimbursement and what the IRS considers reasonable and the amounts claimed are higher than the normal charge for similar services in the locality, the IRS will consider the costs to be excessive and will disallow them. If there is a discrepancy and a fee schedule is not available, employees will need to obtain information from the title company and at least three different realtors in the locality in which the expenses are incurred. Documentation requested may include, but will not be limited to:

The current schedule of closing costs which applies to the area in which employee is buying or selling

Information concerning local custom and practices with respect to charging of closing costs which relate to either their sale or purchase and whether such costs are customarily paid by the seller or purchaser

Information on the local terminology used to describe the costs specified in paragraph (b) above

Unexpired Lease

Settlement of an employee's unexpired lease are reimbursable, when the employee's unexpired lease (including month-to-month) is for residence quarters at the employee's old official station. IRS may reimburse for settlement expenses for an unexpired lease, including but not limited to, broker’s fees for obtaining a sublease or charges for advertising if:

Applicable laws or the terms of the lease provide for payment of settlement expenses.

Such expenses cannot be avoided by sublease or other arrangement.

Employee has not contributed to the expenses by failing to give appropriate lease termination notice promptly after the employee has definite knowledge of the transfer.

The broker’s fees or advertising charges are not in excess of those customarily charged for comparable services in that locality.

Employees must submit Form 8741, Relocation Voucher, requesting reimbursement for expenses of an unexpired lease settlement with an itemization of all expenses claimed including:

Documentary support showing that they paid all lease settlement fees.

A copy of either the lease agreement under which a charge for settling an unexpired lease was levied or the legal citation that provides for the lease settlement charge.

Documentation to show the date the employee was informed of the transfer and the date the employee informed the lease holder, if timeliness of notification to the lease holder is a factor in the settlement charge.

A statement of the transfer date if such date cannot be otherwise verified.

Allowance for Miscellaneous Expenses

This section provides IRS guidance and instructions to supplement FTR Chapter 302, Relocation Allowances, Part 302–16, Allowance for Miscellaneous Expenses , including:

If an employee elects the standard allowance rather than itemizing miscellaneous expenses, the IRS will reimburse the following amount without support or documentation:

$650 or the equivalent of one week’s basic gross pay, whichever is the lesser of the amount, for employees relocating without an immediate family;

$1,300 or the equivalent of two week’s basic gross pay, whichever is the lesser of the amount, for employees relocating with an immediate family member.

When an employee itemizes miscellaneous expenses, instead of requesting reimbursement of the standard allowance, all receipts are required justifying the employee expenses starting with the first dollar amount incurred. The maximum employees will be reimbursed, regardless of their actual miscellaneous expenses, is one week’s basic gross pay when moving without an immediate family member or two week’s basic gross pay when moving with an immediate family member. Employees should refer to FTR Chapter 302, Relocation Allowances, Part 16.202, Are There Any Restrictions to the Types of Costs We May Cover? , and Part 16.203, What Are Examples of Types of Costs Not Covered by the Miscellaneous Expense Allowance (MEA)? , for restrictions and examples of costs not covered by the miscellaneous expense allowance.

The amount cannot exceed the maximum rate of a grade GS-13 biweekly pay for the locality area of the new official station.

Employees may claim reimbursement for the following miscellaneous expenses:

Fees for new drivers licenses

Auto registration fees, if the POV is taken to the new duty station

Installation fees for cable and telephone

Refitting carpeting and draperies for new residence

Expenses associated with shipping a household pet (dog or cat), limited to transportation and handling costs required to meet the rules of air carriers.

Professional license fees required by the new official station state that are directly related to the employee's or a family member’s occupation, such as fees required to take the bar exam or teaching certification.

Third-party services related to the shipment of the employee household goods, such as washer/dryer disconnect and reconnect of gas appliances that are determined to be necessary and incident to the move

Voucher Submission

Employees must submit Form 8741, Relocation Voucher, within 15 calendar days after the completion of each relocation activity, such as a househunting trip, real estate closing, or en route travel. When filing the final voucher for a category of expense, employees must put an "F" in the box immediately preceding the expense being claimed in Block 15.

Employees must include supporting documentation with Form 8741, Relocation Voucher. Depending upon the type of expense employees are claiming, documentation includes, but is not limited to, the following:

Vouchers submitted with missing receipts may be elevated to the Travel Policy and Review office for review and approval.

When employees undertake a TDY assignment en route to a new official location, their relocation travel to the new post of duty stops upon arrival at the TDY location. Employees must process their TDY expenses in the electronic travel system.

See IRM 1.32.11, IRS City-to-City Travel Guide, for information and entitlements while on temporary duty travel.

Employees must submit each relocation voucher to the approving official for approval. After approval, the employee or the gaining office forwards the voucher to the *CFO BFC Relocation mailbox for processing.

Relocation Income Tax Allowance (RITA)

This section provides IRS guidance and instructions to supplement FTR Chapter 302, Relocation Allowances, Part 302-17, Taxes on Relocation Expenses, Including:

The RITA reimburses an employee for federal, state and local income taxes incurred on taxable relocation travel reimbursements reportable on Form W-2, Wage and Tax Statement. The RITA does not reimburse employees for their Medicare or Social Security taxes on relocation travel expense reimbursements. The RITA is paid in two parts:

Through the payment of a withholding tax allowance (WTA) at the time vouchers are paid.

Through the payment of the final RITA in the following calendar year.

The CFO relocation technicians will calculate the withholding taxes on relocation vouchers to determine the amount that is subject to income tax after reviewing the voucher(s) and determining the amount of reimbursement due to the employee.

The tax withholdings and reimbursements of moving expenses have an effect on the employee’s final tax liability. The taxable reimbursements are considered income to the employee and the additional income may place the employee into a higher tax bracket. Withheld taxes may not be sufficient to cover the additional tax liability for the employee as a result of the higher tax bracket. The employee is responsible for the additional tax liability, but may be reimbursed through the RITA process.

The RITA reimburses the employee for the federal and state tax withholdings on taxable relocation travel expenses. The WTA also reimburses the employee the federal tax withholdings on the WTA itself, since the WTA is also considered income to the employee. The technician calculates and applies the WTA automatically, requiring no change to the voucher filing procedures. When the technician processes a voucher and the reimbursement is subject to federal tax, the technician applies an estimated partial payment of the RITA as an offset to the federal tax withholdings. The technician calculates the withholding taxes on relocation vouchers to determine the amount that is subject to income tax after reviewing the voucher(s) and determining the amount of reimbursement due to the employee.

The technician sends the employee a statement of tax withholdings as each voucher is processed showing the voucher amount approved for payment, the WTA amount, and the federal, state and Federal Insurance Contributions Act (FICA) withholdings.

The technician is responsible for filing the appropriate withholding taxes for moving expenses for state, territorial, or District of Columbia returns and for transmitting the tax withholdings to the IRS.

The technician prepares a Form W-2, Wage and Tax Statement, for each employee to whom payments were made for moving expenses no later than January 31 of each year.

Employees must file the RITA claim no later than June 30 of the year following the year when the tax reimbursements were paid unless the employee has an extension of their tax return, then the RITA claim is due 30 days after the approved extension. When an employee does not file a claim, the IRS assumes that the RITA amount is zero. Consequently, employees would be required to reimburse the IRS for the amount of the WTA(s) previously paid to them for the related move.

IRS forwards the relocation Form W-2, Wage and Tax Statement, to each eligible employee by January 31. The technician emails the RITA package which includes the instructions along with the necessary forms for filing a RITA claim. IRS sends the W-2 reports and authorization reports by U.S. mail generated through the relocation system. The employee must complete:

Form 8741, Relocation Voucher. The amount claimed block on the Form 8741, Relocation Voucher, will be left blank as the RITA is calculated by the technician. The back of the form will be left blank except for the following statement in the Description column: "RITA claim for the Year 20XX. Form 8445, Statement of Income and Tax Filing Status, and supporting documents are attached."

Form 8445, Statement of Income and Tax Filing Status does not require the approving official’s signature.

Form 8445, Statement of Income and Tax Filing Status

A notice is sent to any employee who receives taxable reimbursements for more than one state prior to the mailing of their relocation Form W-2, Wage and Tax Statement. The income is reported to the payroll state as identified by the employee during the year that the expenses were reimbursed.

The WTA could exceed the RITA where the marginal tax rate is less than the supplemental wage withholding. The technician will establish a receivable for the excess WTA, as the IRS overpaid federal taxes on the employee's behalf. However, the result depends on the parameters of the established tax brackets. Employees must notify their technician if they have any change of their tax status such as an amended tax return or tax audit that would change the information provided for calculation of the RITA.

Relocation Debts

A relocation debt may be established when:

The applicable relocation activity for which an advance was issued is completed and the remaining balance of the advance exceeds the expenses claimed on an approved relocation voucher, or

The relocation activity is cancelled, or

A relocation advance becomes 90 days old.

A taxable payment to a moving company or a relocation services company is made on the employee’s behalf and withholding taxes must be collected.

An overweight household goods shipment and overweight household goods storage payment has been paid to a moving company and must be collected.

An employee’s request for relief of the service agreement for failing to effect the transfer is denied and must be collected.

A RITA voucher reconciliation of the withholding tax allowance paid and the employee’s income tax bracket results in a negative payment to the employee.

If a debt is established in connection with an employee’s relocation, the debt is subject to the debt collection procedures in IRM 1.36.4, Administrative Accounting and Financial Reports, Administrative (Non-Tax) Debt Management.

If the employee needs to repay a debt related to their relocation, the employee must submit payment for the advance payable to the IRS to: Beckley Finance Center ATTN: Debt Collection Unit P.O. Box 9002 Beckley, WV 25802-9002

The employee must include a Debt Collection Repayment memo with their payment. The form can be found at the CFO website, select: Travel Guidance and then Travel Policy and Procedures.

The employee has the right to dispute a debt or request a waiver if they have documentation or additional information to support their request. See IRM 1.36.4, Administrative Accounting and Financial Reports, Administrative (Non-Tax) Debt Management for details surrounding the debt waiver process and the employee’s appeal rights.

The following forms apply to this program:

More Internal Revenue Manual

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How to (Legally) Deduct Rental Property Travel Expenses

Tax law in the U.S. can be extremely friendly to real estate investors. Rental property owners can deduct normal operating expenses, and use depreciation to reduce taxable net income. Another benefit of owning rental real estate is deducting travel expenses.

However, there’s a right way and a wrong way to claim travel expenses on your tax return. In this article, we’ll explain how rental property travel expenses work, along with some of the most common travel expense deductions for real estate investors. After all, tax deductions are often seen as one of the biggest benefits of owning real estate.

Note: this is not tax advice and we recommend you speak with your CPA to understand your specific situation.

Can Landlords Deduct Travel Expenses?

Landlords can deduct travel expenses when traveling to visit a remote real estate investment in another market and for going to a property you own locally. 

However, the IRS knows that travel expenses are one of the most abused deductions for business people, so it’s important to play by the rules before claiming a deduction for rental property travel expenses.

IRS and Travel Expense Deductions

According to IRS Publication 527 , Residential Rental Property:

“You can deduct the ordinary and necessary expenses of traveling away from home if the primary purpose of the trip is to collect rental income or to manage, conserve, or maintain your rental property. You must properly allocate your expenses between rental and nonrental activities. You can’t deduct the cost of traveling away from home if the primary purpose of the trip is to improve the property. The cost of improvements is recovered by taking depreciation.”

The IRS also provides additional guidance for travel expense deductions in Publication 463 .

Travel Expense Rules of Thumb

If you’re ever in doubt about whether a specific travel expense is deductible, it’s always a good idea to get professional advice from your accountant or CPA. With that in mind, here are some rules of thumb to follow to help understand if an expense incurred when traveling can be deducted on your tax return:

• Purpose of travel must be mainly for business and have a clear business purpose.
• Majority of the travel time must be spent on your rental business rather than leisure.
• Travel expenses must be “ordinary and necessary” for your real estate business but not overdone, such as staying in a 5-star resort versus an Airbnb or VRBO when going out of town.
• Rental activity like showing the property to prospective tenants or doing an inspection is also a deductible travel expense, provided that was the main reason for traveling.
• Traveling to conduct repairs and maintenance is deductible, but traveling to the property to make a capital improvement such as replacing the HVAC or installing a new roof is not a deductible expense.

Common Rental Property Travel Expense Deductions

Your travel expenses and the reason for taking a trip must have a logical connection to your rental property business. 

A good way to decide whether or not a travel expense is legitimate is to use common sense. For example, if your wife or partner says something along the lines of, “Wow, I didn’t know this was deductible!” you may want to think twice before claiming the travel expense.

Now, let’s take a look at some of the common rental property travel expense deductions real estate investors can claim:

• Expenses traveling to and from the airport, such as a taxi or Uber.
• Airfare, train, or bus fare.
• Car rental expenses and associated costs such as parking fees or tolls.
• Travel to a Home Depot or Lowes to shop for materials and supplies to be used for your rental property.
• Traveling to the property to show it to prospective tenants.
• Travel expenses incurred to interview or meet with members of your local real estate team, such as an accountant, attorney, leasing agent, property manager, lender, or general contractor.
• Costs of traveling to an event or meeting for continuing education purposes, such as a seminar, trade show, or convention.
• Shipping costs for luggage or items required for your rental property business.
• Lodging expenses and 50% of meal and beverage expenses incurred while you are traveling outside of your home market.
• Tips paid for service in conjunction with travel to your rental property.
• Miscellaneous expenses such as laundry and dry cleaning, groceries, computer rental fees, or internet charges.

Travel Expenses to a New Rental Market

A recent post on the Stessa blog explains how travel expenses are treated differently when going to a new market to investigate potential rental property to invest in. 

For example, let’s say you’ve been researching the Austin real estate market on the internet and know it’s one of the best cities to invest in real estate this year. 

If you travel to Austin, incur $2,000 in travel expenses, and eventually buy your first rental property in the market, those travel expenses are not immediately deductible. Instead, they must be capitalized by adding them to your property basis and depreciated over 27.5 years rather than being expensed the year they are incurred. 

Now, assume your first rental property in Austin performs beyond your wildest expectations and you want to buy another. This time your travel expenses can be fully deducted (instead of capitalized) because you already own a property in the market, assuming the travel expenses are ordinary and necessary for your rental property business in the market.

So what happens if you travel to a different city to research potential rental properties, but decide not to invest? 

In a situation like this, the travel costs are considered a business start-up expense and can only be deducted after you buy your first rental property in that market. If you’re a remote real estate investor, it may be a good idea to research as much as possible online. Then, wait to travel to the market once you have a property under contract and the home has passed its preliminary inspections.  

How Auto Deductions Work

Real estate investors who own rental property in their home market can claim the auto expense deduction provided by the IRS. 

As a side note, your home market – also known as your “tax home” – is your regular place of business. For most real estate investors, the home market is also the city that they live in. Even if you own rental property remotely, or in an area of the country outside of your home market, you still do the majority of your work on your rental property business from your home office.

There are two ways rental property owners can claim an auto expense deduction:

Standard Mileage Deduction

The standard mileage deduction is the easiest way to claim an auto deduction when traveling to a rental property in your own market. To calculate the mileage deduction, simply keep track of your miles driven for your rental property business and multiply by the standard mileage rate. 

The standard mileage rate issued by the IRS for 2021 for a car, van, pickup, or panel truck is 56 cents per mile. For example, if you drove a total of 500 miles this month for rental property-related purposes, the standard mileage deduction would be $280 (500 miles x 56 cents).

Actual Expense Deduction

The second way that rental property investors can claim an auto expense is by keeping track of all auto expenses and business-related miles, then claiming proportional share used for business as the actual auto expense deduction.

For example, assume your auto expenses – items such as car payments, gas and oil, insurance, repairs and maintenance, car washes, registration and license fees, and tolls and parking costs – were $975 this month. If you drove a total of 2,100 miles and 500 of those miles were related to your rental property business, your actual auto expense deduction would be $232:

• $975 total auto expenses / 2,100 total miles driven = 46.4 cents per mile
• 500 miles related to rental property business x 46.4 cents = $232

Keeping Track of Your Miles

Both the standard mileage deduction method and the actual expense deduction method require you to keep track of the miles driven for your rental property business:

• Odometer reading at the beginning of the period (usually the month or year).
• Odometer reading at the end of the period.
• For each business trip, the date and purpose of each trip, the number of miles driven, and the location of the tip.

How to Track Rental Property Travel Expenses

You can keep track of your mileage using a logbook or digitally. Smartphone apps for tracking mileage include MileIQ , SherpaShare , and TripLog .

If you’re using the actual expense deduction you’ll also need to keep track of your auto expenses. 

One of the easiest ways to do this is with Stessa’s mobile app . Each time you incur an auto expense, scan the receipt or invoice. Stessa’s machine learning and OCR technologies will parse all of the details and automatically organize the information for you.

Mixing Business with Pleasure

Sometimes it’s possible to mix personal and business travel provided that you do it strategically. Generally speaking, as long as at least 50% of your travel days were spent on your rental property business, your trip may still be tax-deductible

Of course, any lodging and meal expenses incurred on non-business days are not tax-deductible as a travel expense, nor are the travel expenses for a spouse, partner, or child unless they accompanied you on the trip for a legitimate business purpose.

Final Thoughts on Deducting Travel Expenses

There are a variety of reasons people invest in real estate – recurring rental income, appreciation in property value over the long term – and of course, rental property travel expenses. 

Whether you’re traveling outside of your home market as a remote real estate investor or going to rental property you own in-town, travel expenses are typically deductible as long as they’re ordinary and necessary for your rental property business.

Jeff has over 25 years of experience in all segments of the real estate industry including investing, brokerage, residential, commercial, and property management. While his real estate business runs on autopilot, he writes articles to help other investors grow and manage their real estate portfolios.

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Startups Raise $331 Million for Flying Taxi Airports and AI Expense Management 

Justin Dawes , Skift

April 19th, 2024 at 2:21 PM EDT

Four travel startups have raised more than $100 million each over the past two weeks.

Justin Dawes

Travel Startup Funding This Week

Each week we round up travel startups that have recently received or announced funding . Please email Travel Tech Reporter Justin Dawes at [email protected] if you have funding news.

Last week was the second-biggest this year for travel startup funding. And this week’s total, $331 million, makes it the third-biggest this year.

The largest fundraise this week was by expense-management platform Ramp, which has now raised $450 million over the past eight months alone.

Read more below about the three startups that announced fundraises this week.

Ramp: $150 Million

Ramp , a platform that helps companies manage expenses including travel, has raised $150 million in a series D-2 funding round at a valuation of $7.65 billion.

The New York City-based company in August 2023 raised a $300 million series D round at a valuation of $5.8 billion, co-led by Thrive Capital and Sands Capital.

Khosla Ventures and Founders Fund co-led the latest round, with support from new investors Sequoia Capital, Greylock, and 8VC, along with existing investors Thrive Capital, General Catalyst, Sands Capital, D1 Capital Partners, Lux Capital, Iconiq Capital, Definition Capital, and Contrary Capital.

The company last year launched Ramp for Travel through partnerships with corporate travel agencies TravelPerk and Flight Centre’s Corporate Traveler, as well as Lyft and WeWork. The idea is that through tech integrations with these agencies, Ramp automatically collects receipts from any bookings, removing the need to submit expenses. 

The travel platform also integrates each client’s travel policies and provides their employees with corporate cards, which are embedded with controls and limits on flights, hotels, and more.

Ramp said it released more than 150 new features in 2023, including an integration with Uber for Business , making it easier for users to expense rides and food deliveries through Uber. 

Ramp said it has 25,000 clients. That number last August was 15,000. 

The latest funding will go toward strengthening the tech product, including adding features for AI-powered automation, spending analytics, and more. 

Skyports: $110 Million

Skyports , which is developing airports for flying taxis, has raised $110 million in series C funding. 

ACS Group, the civil engineering and construction company, led the round and is now the startup’s largest investor. Airport operator Groupe ADP was another investor in the round.

London-based Skyports designs and plans to operate airports — known as “vertiports” — for the future industry of vertical take-off and landing aircrafts, which are usually built with electric or hybrid-electric propulsion. The startup also operates drone delivery services. 

Skyports earlier this year signed a deal with the Roads and Transport Authority of Dubai and the company Joby Aviation to design and operate a vertiport ahead of plans to begin air taxi services in Dubai by 2026. California-based Joby Aviation is designing an electric-powered aircraft with a top speed of 200 miles per hour, a maximum range of 150 miles, and space for a pilot and four passengers. 

Skyports and Groupe ADP operate a site near Paris for testing flights, ground infrastructure, the passenger experience, and other operations. Skyports and Joby have a lab for developing tech and procedures of the future flying taxi industry. 

Skyports said it owns and operates one of London’s two commercial heliports, which it is also using for testing. 

Profitroom: $71.3 Million

Profitroom, a booking engine for hotels, has raised $71.3 million (€67 million).

MCI Capital made the investment for a 65% stake in the company. 

Poland-based Profitroom said its software enables hotels to integrate guest booking capabilities onto their websites, as well as share availability with third-party booking sites and automate marketing. 

The Profitroom management team is unchanged following the deal, the company said. 

The company plans to expand into Western Europe, Africa, Latin America, the Middle East, and Asia.

Skift Cheat Sheet

Seed  capital is money used to start a business, often led by angel investors and friends or family.

Series A  financing is typically drawn from venture capitalists. The round aims to help a startup’s founders make sure that their product is something that customers truly want to buy.

Series B  financing is mainly about venture capitalist firms helping a company grow faster. These fundraising rounds can assist in recruiting skilled workers and developing cost-effective marketing.

Series C  financing is ordinarily about helping a company expand, such as through acquisitions. In addition to VCs, hedge funds, investment banks, and private equity firms often participate.

Series D, E, and, beyond  These mainly mature businesses and the funding round may help a company prepare to go public or be acquired. A variety of types of private investors might participate.

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Tags: corporate travel , dubai , eVTOL , flying cars , funding , vcroundup

Photo credit: Skyports is developing a flying taxi airport for Dubai in partnership Joby Aviation. Joby Aviation / Joby Aviation

2024 federal budget's key takeaways: Housing and carbon rebates, students and sin taxes

Budget sees nearly $53b in new spending over the next 5 years.

What's in the new federal budget?

Social sharing.

Finance Minister Chrystia Freeland today tabled a 400-page-plus budget her government is pitching as a balm for anxious millennials and Generation Z.

The budget proposes $52.9 billion in new spending over five years, including $8.5 billion in new spending for housing. To offset some of that new spending, Ottawa is pitching policy changes to bring in new revenue.

Here are some of the notable funding initiatives and legislative commitments in budget 2024.

Ottawa unloading unused offices to meet housing targets

One of the biggest pillars of the budget is its housing commitments. Before releasing the budget, the government laid out what it's calling Canada's Housing Plan — a pledge to "unlock" nearly 3.9 million homes by 2031.

The government says two million of those would be net new homes and it believes it can contribute to more than half of them. 

It plans to do that by:

• Converting underused federal offices into homes. The budget promises $1.1 billion over ten years to transform 50 per cent of the federal office portfolio into housing.
• Building homes on Canada Post properties. The government says the 1,700-plus Canada Post offices across the country can be used to build new homes while maintaining postal services. The federal government says it's assessing six Canada Post properties in Quebec, Alberta and British Columbia for development potential "as a start."
• Rethinking National Defence properties. The government is promising to look at redeveloping properties and buildings on National Defence lands for military and civilian use.
• Building apartments. Ottawa is pledging a $15 billion top-up to the Apartment Construction Loan Program, which says it will build 30,000 new homes across Canada.

Taxing vacant land?

As part of its push on housing, the federal government also says it's looking at vacant land that could be used to build homes.

It's not yet committing to new measures but the budget says the government will consider introducing a new tax on residentially zoned vacant land. 

• Freeland's new federal budget hikes taxes on the rich to cover billions in new spending
• Are you renting with no plans to buy? Here's what the federal budget has for you

The government said it plans to launch consultations on the measure later this year.

Help for students 

There's also something in the budget for students hunting for housing.

The government says it will update the formula used by the Canada Student Financial Assistance Program to calculate housing costs when determining financial need, to better reflect the cost of housing in the current climate.

The government estimates this could deliver more aid for rent to approximately 79,000 students each year, at an estimated cost of $154.6 million over five years.

• Updated Federal budget's funding boost for defence spread out over multiple years
• Liberals pledge $9B in new money for Indigenous communities in 2024 budget

The government is also promising to extend increased student grants and interest-free loans, at an estimated total cost of $1.1 billion this year.

Increase in taxes on capital gains

To help cover some of its multi-billion dollar commitments, the government is proposing a tax hike on capital gains — the profit individuals make when assets like stocks and second properties are sold.

The government is proposing an increase in the taxable portion of capital gains, up from the current 50 per cent to two thirds for annual capital gains over $250,000. 

New investment to lead 'housing revolution in Canada,' Freeland says

Freeland said the change would impact the wealthiest 0.1 per cent.

There's still some protection for small businesses. There's been a lifetime capital gains exemption which allows Canadians to exempt up to $1,016,836 in capital gains tax-free on the sale of small business shares and farming and fishing property. This June the tax-free limit will be increased to $1.25 million and will continue to be indexed to inflation thereafter, according to the budget.

The federal government estimates this could bring in more than $19 billion over five years, although some analysts are not convinced.

Disability benefit amounts to $200 per month 

Parliament last year passed the Canada Disability Benefit Act, which promised to send a direct benefit to low-income, working-age people with disabilities. 

Budget 2024 proposes funding of $6.1 billion over six years, beginning this fiscal year, and $1.4 billion per year ongoing, for a new Canada Disability Benefit.

Advocates had been hoping for something along the lines of $1,000 per month per person . They'll be disappointed.

According to the budget document, the maximum benefit will amount to $2,400 per year for low income individuals with disabilities between the ages of 18 and 64 — about $200 a month.

• Federal government plans to lease public lands for construction through new housing strategy
• Alberta premier says she's prepared to take Ottawa to court over housing deals

The government said it plans for the Canada Disability Benefit Act to come into force in June 2024 and for payments to start in July 2025.

Carbon rebate for small businesses coming 

The federal government has heard an earful from small business advocates who accuse it of reneging on a promise to return a portion of carbon pricing revenues to small businesses to mitigate the tax's economic costs.

• What's behind the carbon tax, and does it work?
• Federal government scales back carbon tax rebates for small businesses

The budget proposes to return fuel charge proceeds from 2019-20 through 2023-24 to an estimated 600,000 businesses with 499 or fewer employees through a new refundable tax credit.

The government said this would deliver $2.5 billion directly to Canada's small- and medium-sized businesses.

Darts and vape pods will cost more 

Pitching it as a measure to cut the number of people smoking and vaping, the Liberals are promising to raise revenues on tobacco and smoking products.

• Just Asking  wants to know:   What questions do you have about quitting smoking or vaping? Do you think sin taxes will encourage smoking cessation?  Fill out the details on  this form  and send us your questions ahead of our show on April 20.

Starting Wednesday, the total tobacco excise duty will be $5.49 per carton. The government estimates this could increase federal revenue by $1.36 billion over five years starting in 2024-25.

The budget also proposes to increase the vaping excise duty rates by 12 per cent effective July 1. That means an increase of 12 to 24 cents per pod, depending on where you live. 

• 'Stay the hell away from our kids': Health minister vows to restrict nicotine pouches — but how?

Ottawa hopes this increase in sin taxes will bring in $310 million over five years, starting in 2024-25.

More money for CBC 

Heritage Minister Pascale St-Onge has mused about redefining the role of the public broadcaster before the next federal election . But before that happens, CBC/Radio-Canada is getting a top-up this year. 

The budget promises $42 million more in 2024-25 for CBC/Radio-Canada for "news and entertainment programming." CBC/Radio-Canada received about $1.3 billion in total federal funding last year.

The government says it's doing this to ensure that Canadians across the country, including rural, remote, Indigenous and minority language communities, have access to independent journalism and entertainment.

Last year, the CBC announced a financial shortfall, cut 141 employees and eliminated 205 vacant positions. In a statement issued Tuesday, CBC spokesperson Leon Mar said the new funding means the corporation can balance its budget "without significant additional reductions this year."

Boost for Canada's spy agency 

As the government takes heat over how it has handled the threat of foreign election interference, it's promising more money to bolster its spy service.

The Canadian Security Intelligence Service is in line to receive $655.7 million over eight years, starting this fiscal year, to enhance its intelligence capabilities and its presence in Toronto.

• CSIS chief defends his spies' work after PM casts doubt on reliability of agency's reports
• Trudeau says it's his job to question CSIS intelligence, call out 'contradictions'

The budget also promises to guarantee up to $5 billion in loans for Indigenous communities to participate in natural resource development and energy projects in their territories.

These loans would be provided by financial institutions or other lenders and guaranteed by the federal government, meaning Indigenous borrowers who opt in could benefit from lower interest rates, the budget says. 

ABOUT THE AUTHOR

Catharine Tunney is a reporter with CBC's Parliament Hill bureau, where she covers national security and the RCMP. She worked previously for CBC in Nova Scotia. You can reach her at [email protected]

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Federal budget 2024: Key measures that may have a direct impact on you

We analyze the proposed federal budget measures, and the effect they may have on Canadians and their families.

April 16, 2024

By RBC Family Office Services

Deputy Prime Minister and Minister of Finance Chrystia Freeland released the federal budget on April 16, 2024, against a backdrop of Canadians facing the significant challenge of elevated costs of living. In light of the continued economic uncertainty, measures in the budget are targeted with the stated goal of building more affordable homes, making life cost less and growing the economy.

Although there are no proposed changes to the personal tax brackets, the budget proposes an increase to the capital gain inclusion rate. The budget also suggests several amendments to the alternative minimum tax (AMT) proposals, that include reducing the negative impact on the tax treatment of charitable donations.

The following is a summary of the most significant tax and wealth planning measures announced in the budget.

Capital gains inclusion rate

The budget proposes to increase the capital gains inclusion rate from 50 percent to 66.67 percent for corporations and trusts, and from 50 percent to 66.67 percent on the portion of capital gains realized in the year that exceed $250,000 for individuals, for capital gains realized on or after June 25, 2024. The $250,000 threshold would effectively apply to capital gains realized by an individual, either directly or indirectly via a partnership or trust, net of any: ­current-year capital losses; ­capital losses of other years applied to reduce current-year capital gains; and capital gains in respect of which the LCGE, the proposed employee ownership trust (EOT) exemption or the proposed Canadian Entrepreneurs’ Incentive is claimed.

Claimants of the employee stock option deduction would be provided a 33.33 percent deduction of the taxable benefit (reduced from 50 percent) to reflect the new capital gains inclusion rate but would be entitled to a deduction of 50 percent of the taxable benefit, up to a combined limit of $250,000 for both employee stock options and capital gains.

Net capital losses of prior years would continue to be deductible against taxable capital gains in the current year by adjusting their value to reflect the inclusion rate of the capital gains being offset. This means a capital loss realized prior to the rate change would fully offset an equivalent capital gain realized after the rate change.

For tax years that begin before and end on or after June 25, 2024, two different inclusion rates would apply. As a result, transitional rules would be required to separately identify capital gains and losses realized before the effective date (Period 1) and those realized on or after the effective date (Period 2). For example, taxpayers would be subject to the higher inclusion rate in respect of the portion of their net gains arising in Period 2 that exceed the $250,000 threshold, to the extent that these net gains are not offset by a net loss incurred in Period 1 or any other taxation years.

The annual $250,000 threshold for individuals would be fully available in 2024 (i.e., it would not be prorated) and would apply only in respect of net capital gains realized in Period 2. Other consequential amendments would also be made to reflect the new inclusion rate. Additional design details will be released in the coming months.

Personal tax measures

Lifetime capital gains exemption (lcge).

An individual is provided with a lifetime tax exemption for capital gains realized on the disposition of qualified small business corporation shares and qualified farm or fishing property. The budget proposes to increase the LCGE from the current amount of $1,016,836 to $1.25 million. This increase would apply to dispositions that occur on or after June 25, 2024. The LCGE will resume indexation to inflation in 2026.

Canadian Entrepreneurs’ Incentive

The budget proposes to introduce the Canadian Entrepreneurs’ Incentive. This incentive would reduce the tax rate on capital gains on the disposition of qualifying shares by an eligible individual. Specifically, this incentive would provide for a capital gains inclusion rate that is 50 percent the prevailing inclusion rate (i.e., 33.33 percent), on up to $2 million in capital gains per individual over their lifetime. The lifetime limit would be phased in by increments of $200,000 per year, beginning on January 1, 2025, before ultimately reaching a value of $2 million by January 1, 2034. Under the 66.67 percent capital gains inclusion rate proposed in the budget, this measure would result in an inclusion rate of 33.33 percent for qualifying dispositions. This measure would apply in addition to any available capital gains exemption.

A share of a corporation would be a qualifying share if certain conditions are met, including all the following conditions:

• At the time of sale, it was a share of the capital stock of a small business corporation (for the purposes of the Income Tax Act (ITA)) owned directly by the claimant.
• Throughout the 24-month period immediately before the disposition of the share, it was a share of a Canadian-Controlled Private Corporation (CCPC) and more than 50 percent of the fair market value (FMV) of the assets of the corporation were: (1) used principally in an active business carried on primarily in Canada by the CCPC, or by a related corporation, (2) certain shares or debts of connected corporations, or (3) a combination of these two types of assets.
• The claimant was a founding investor at the time the corporation was initially capitalized and held the share for a minimum of five years prior to disposition.
• At all times since the initial share subscription until the time that is immediately before the sale of the shares, the claimant directly owned shares amounting to more than 10 percent of the FMV of the issued and outstanding capital stock of the corporation and giving the individual more than 10 percent of the votes that could be cast at an annual meeting of the shareholders of the corporation.
• Throughout the five-year period immediately before the disposition of the share, the claimant must have been actively engaged on a regular, continuous and substantial basis in the activities of the business.
• The share does not represent a direct or indirect interest in a professional corporation, a corporation whose principal asset is the reputation or skill of one or more employees, or a corporation that carries on certain types of businesses (including a business operating in the financial, insurance, real estate, food and accommodation, arts, recreation, or entertainment sector or providing consulting or personal care services).
• The share must have been obtained for FMV consideration.

This measure would apply to dispositions that occur on or after January 1, 2025.

Further amendments to alternative minimum tax (AMT)

AMT is a parallel tax calculation that prevents high-income earners and certain trusts from paying little or no tax as a result of certain tax incentives, such as claiming certain tax deductions and credits. You pay the AMT or regular tax, whichever is highest. Further to the amendments announced in the 2023 budget, the government proposes changes, including:

• Allowing individuals to claim 80 percent (instead of the previously proposed 50 percent) of the charitable donation tax credit when calculating AMT.
• Allowing deductions for the Guaranteed Income Supplement (GIS), social assistance, and workers’ compensation payments.
• Allowing individuals to fully claim the federal logging tax credit under the AMT.
• Exempting EOTs from the AMT.
• Allowing certain disallowed credits under the AMT to be eligible for the AMT carry-forward (i.e., the federal political contribution tax credit, investment tax credits, and labour-sponsored funds tax credit).

These amendments would apply to taxation years that begin on or after January 1, 2024 (i.e., the same day as the broader AMT amendments).

Home buyers’ plan (HBP)

The HBP helps eligible home buyers save for a downpayment by allowing them to withdraw up to $35,000 from a registered retirement savings plan (RRSP) to purchase or build their first home, or a home for a specified disabled individual, without having to pay tax on the withdrawal.

To provide eligible home buyers with greater access to their RRSPs, the budget proposes to increase the HBP withdrawal limit from $35,000 to $60,000. This increase would also apply to withdrawals made for the benefit of a disabled individual. Couples purchasing a home jointly may therefore be able to withdraw up to $120,000 from their RRSPs to purchase a first home. While this measure applies to the 2024 and subsequent calendar years in respect of withdrawals made after April 16, 2024, be sure to check with your financial institution whether the increase in the withdrawal limit will be implemented prior to this measure receiving royal assent.

Amounts withdrawn under the HBP must be repaid to an RRSP over a period not exceeding 15 years, starting the second year following the year in which a first withdrawal was made. The budget proposes to temporarily defer the start of the 15-year repayment period by an additional three years for participants making a first withdrawal between January 1, 2022, and December 31, 2025. Accordingly, the 15-year repayment period would start the fifth year following the year in which a first withdrawal was made. For a couple who withdrew the maximum in 2023, extending the grace period could allow them to defer annual repayments as large as $4,667 by an additional three years.

Personal tax credit and deduction changes

• Volunteer Firefighters Tax Credit and the Search and Rescue Volunteers Tax Credit: The government proposes to double this credit to $6,000. This would increase the maximum tax relief to $900. This enhancement would apply to the 2024 and subsequent taxation years.
• Mineral Exploration Tax Credit: The government proposes to extend eligibility for this credit for one year, to flow-through share agreements entered into on or before March 31, 2025.
• Disability Supports Deduction: This deduction allows individuals who have an impairment in physical or mental functions to deduct certain expenses that enable them to earn business or employment income or to attend school. The budget proposes to expand the list of expenses recognized under the Disability Supports Deduction, subject to the specified conditions. This measure would apply to the 2024 and subsequent taxation years.

Qualified investments for registered plans

Registered plans can only invest in qualified investments, including mutual funds, publicly traded securities, government and corporate bonds, and guaranteed investment certificates. The qualified investment rules can be inconsistent or difficult to understand in some cases. As such, the budget invites stakeholders to provide suggestions on how the qualified investment rules could be modernized on a prospective basis to improve the clarity and coherence. Stakeholders are invited to submit comments to [email protected] by July 15, 2024.

Business tax measures

Employee ownership trust (eot) tax exemption.

An EOT is a form of employee ownership where a trust holds shares of a corporation for the benefit of the corporation’s employees. EOTs can be used to facilitate the purchase of a business by its employees, without requiring them to pay directly to acquire shares.

The budget provides further details on the capital gains exemption announced in the 2023 Fall Economic Statement available to business owners who sell their business to an EOT. The exemption, worth $10 million, will be available to individuals (other than trusts) on the sale of shares to an EOT if certain conditions are met. The total exemption that can be claimed for any qualifying business transfer to an EOT cannot exceed $10 million. Therefore, if multiple individuals dispose of the shares to an EOT as part of a qualifying business transfer, and each individual qualifies for the exemption, the individuals would be required to agree on how to allocate the exemption.

The exemption will no longer be available if a disqualifying event occurs within 36 months of sale. If the exemption was already claimed, it would be retroactively denied. Disqualifying events include the EOT losing its status as an EOT or if less than 50 percent of the FMV of the qualifying business’ shares is attributable to assets used principally in an active business at the beginning of two consecutive taxation years of the corporation. If a disqualifying event occurs after 36 months following the sale, the EOT will be deemed to realize a capital gain equal to the total amount of exempt capital gains.

Capital gains exempted through this measure would be subject to an inclusion rate of 30 percent for the purposes of the AMT.

The budget proposes to expand qualifying business transfers to include the sale of shares to a worker cooperative corporation that meets the definition under the Canada Cooperatives Act. The government will release further details on the application of the exemption in a sale to a worker cooperative.

This measure would apply to qualifying dispositions of shares that occur between January 1, 2024, and December 31, 2026.

Purpose-built rental housing

Accelerated capital cost allowance (cca).

The CCA system determines the deductions that a business may claim each year for income tax purposes in respect of the capital cost of its depreciable property. Currently, purpose-built rental buildings are eligible for a CCA rate of 4 percent under Class 1. The budget proposes a temporary accelerated CCA of 10 percent for new eligible purpose-built rental projects that begin construction on or after April 16, 2024, and are available for residents to move in before January 1, 2036. Accelerating CCA will increase after-tax returns on investments for builders, allowing them to recover more of their costs faster, enabling further investment of their money back into new housing projects.

Investments eligible for this measure would continue to benefit from the Accelerated Investment Incentive, which currently suspends the half-year rule, providing a CCA deduction at the full rate for eligible property put in use before 2028. After 2027, the half-year rule would apply, limiting the CCA allowance in the year an asset is acquired to half of the full CCA deduction.

Interest deductibility limits

Budget 2021 announced an earnings stripping measure that limits the amount of net interest and financing expenses that may be deducted by certain taxpayers in computing taxable income. Legislative proposals to implement these excessive interest and financing expenses limitation (EIFEL) rules are currently before Parliament in Bill C-59.

The EIFEL rules provide an exemption for interest and financing expenses incurred in respect of arm’s length financing for certain public-private partnership infrastructure projects. The budget proposes expanding this exemption to also include an elective exemption for certain interest and financing expenses incurred before January 1, 2036, in respect of arm’s length financing used to build or acquire eligible purpose-built rental housing in Canada.

This change would apply to taxation years that begin on or after October 1, 2023, which is consistent with the broader EIFEL amendments.

Accelerated CCA for productivity-enhancing assets

Currently, assets included in Class 44 (patents or the rights to use patented information for a limited or unlimited period), Class 46 (data network infrastructure equipment and related systems software), and Class 50 (general-purpose electronic data-processing equipment and systems software) are prescribed CCA rates of 25 percent, 30 percent and 55 percent, respectively. The budget proposes to provide immediate expensing for new additions of property in respect of these three classes, if the property is acquired on or after April 16, 2024, and becomes available for use before January 1, 2027. The enhanced allowance would provide a 100 percent first-year deduction and would be available only for the year in which the property becomes available for use. When the taxation year is less than 12 months, the accelerated CCA that can be claimed must be prorated.

Mutual fund corporations

The budget proposes amendments to the ITA to address situations where a corporate group is using a mutual fund corporation to benefit from the special rules available to these corporations in an unintended manner. This measure is meant to address specific cases, and not, for example, widely held corporate class mutual funds or other widely held pooled investment vehicles.

Clean energy tax measures for businesses

• Clean Electricity investment tax credit: Budget 2023 announced the refundable Clean Electricity investment tax credit equal to 15 percent of the capital cost of eligible property, with some additional changes announced in the 2023 Fall Economic Statement. The budget provides the design and implementation details of the tax credit.
• Polymetallic extraction and processing: Budget 2023 proposed the Clean Technology Manufacturing investment tax credit, which would provide a refundable tax credit equal to 30 percent of the cost of investments in eligible property used all or substantially all for eligible activities. Recognizing that the production of qualifying materials may occur at polymetallic projects (i.e., projects engaged in the production of multiple metals), the government proposes adjustments to this credit to provide greater support and clarity to businesses engaged in these activities. These changes will apply for property that is acquired and becomes available for use on or after January 1, 2024.
• Canada Carbon Rebate for small businesses: In respect of the government’s commitment to small and medium-sized businesses, the government proposes to return a portion of fuel charge proceeds from a province via the new Canada Carbon Rebate for small businesses, an automatic, refundable tax credit directly for eligible businesses, sized in proportion to the number of persons they employ in the province. The Minister of Finance will specify payment rates for the 2019–2020 to 2023–2024 fuel charge years once sufficient information is available from the 2023 taxation year.
• Electric Vehicle Supply Chain investment tax credit: The government intends to introduce a new 10 percent tax credit on the cost of buildings used in key segments of the electric vehicle supply chain, for businesses that invest in Canada across three supply chain segments: electric vehicle assembly, electric vehicle battery production and cathode active material production. This credit will apply to property that is acquired and becomes available for use on or after January 1, 2024. The credit would be reduced to 5 percent for 2033 and 2034, and it would no longer be in effect after 2034.

Other measures

Canada pension plan (cpp) enhancements.

The budget announces that the federal government, in coordination with provincial partners, proposes to make technical amendments to the CPP legislation. These amendments would:

• Provide a top-up to the Death Benefit for certain contributors.
• Introduce a partial children’s benefit for part-time students.
• Extend eligibility for the disabled contributors children’s benefit when a parent reaches age 65.
• End eligibility for a survivor pension to people who are legally separated after a division of pensionable earnings.

Canada Disability Benefit

The government has drafted new legislation, the Canada Disability Benefit Act (CDDA), which creates a new benefit directed to low-income working-age persons with disabilities. The intention is to bridge the gap in the federal social safety net between the Canada Child Benefit (CCB) and Old Age Security (OAS) and is intended to supplement existing provincial and territorial income support measures.

The government intends for the CDDA to come into force in June 2024 with payments beginning in July 2025. The proposed maximum benefit amount is $2,400 per year for low-income persons with a valid Disability Tax Credit certificate between the ages of 18 and 64. The government intends to consult with persons with disabilities on key elements of the benefit’s design, including the maximum income threshold and phase-out rates.

Canada Child Benefit (CCB)

The CCB is an income-tested benefit that is paid monthly and provides support for eligible families with children under the age of 18. A CCB recipient becomes ineligible for the CCB in respect of a child the month following the child’s death. The budget proposes to amend the ITA to extend eligibility for the CCB in respect of a child for six months after the child’s death (the “extended period”), if the individual would have otherwise been eligible for the CCB in respect of that particular child. A CCB recipient would still be required to notify the Canada Revenue Agency (CRA) of their child’s death before the end of the month following the month of their child’s death. The extended period would also apply to the Child Disability Benefit, which is paid with the CCB in respect of a child eligible for the Disability Tax Credit. This measure would be effective for deaths that occur after 2024.

Avoidance of tax debts

The ITA includes anti-avoidance rules that make a transferee jointly and severely liable with the transferor for the transferor’s tax debts in cases where property was transferred to avoid paying tax liabilities. Although there are existing rules to combat this type of planning, the budget proposes to deem certain transactions to have been completed for the purpose of tax debt avoidance. This deeming rule will apply in situations where property has been transferred from a tax debtor to a person and, as part of the same transaction or series, property has been received by a non-arm’s length person.

The ITA imposes penalties for tax debt avoidance on those who engage in, participate in, assent to or acquiesce in planning activity that they know, or would reasonably be expected to know, is tax debt avoidance planning. The penalty is equal to the lesser of: (1) 50 percent of the tax that is avoided; and (2) $100,000 plus any amount the person, or a related person, is entitled to receive or obtain in respect of the planning activity.

Previously, the courts have held that a taxpayer who engages in tax debt avoidance planning is normally not jointly and severally liable for the portion of the tax debt that has effectively been retained by the planner as a fee. The budget proposes that taxpayers who participate in tax debt avoidance planning be jointly and severally liable for the full amount of the avoided tax debt including the fee paid to advisors for tax debt avoidance planning.

Similar amendments will be made to other comparable provisions in other federal statutes including Select Luxury Items Tax Act and Underused Housing Tax Act. These measures would apply to transactions or series of transactions that occur on or after April 16, 2024.

Charities and qualified donees

The budget proposes to improve the operation of the rules related to registered charities and other qualified donees, including the following measures.

Foreign charities registered as qualified donees

The budget proposes to extend the period for which qualifying foreign charities are granted status as a qualified donee from 24 months to 36 months. This measure would apply to foreign charities registered after April 16, 2024.

Donation receipts

The budget proposes a number of changes to simplify the issuance of official donation receipts and to align the process for issuing receipts with modern practices of charities. For example, the budget proposes to remove the requirement that official donation receipts contain the place of issuance of the receipt; the name and address of the appraiser (if an appraisal of the donated property has been done); and the middle initial of the donor.

The budget also proposes to expressly permit charities to issue official donation receipts electronically, provided they contain all required information, they are issued in a secure and non-editable format, and the charity maintains an electronic copy of the receipts.

The measures relating to modernizing service and donation receipts would apply upon royal assent.

Non-compliance with information requests

The budget proposes several amendments to the information gathering provisions of the ITA with the intention of enhancing the efficiency and effectiveness of tax audits and to facilitate the collection of tax revenues on a timelier basis.

The budget proposes to allow the CRA to issue a new notice, the “notice of non-compliance,” to a taxpayer who has not complied with a requirement or notice to provide assistance or information issued by the CRA. Where a notice of non-compliance has been issued, the normal reassessment period for any taxation year of the taxpayer to which the notice relates would be extended by the period of time the notice is outstanding. A penalty will be imposed on the taxpayer of $50 each day the notice is outstanding, to a maximum of $25,000.

The budget proposes to allow the CRA to include a requirement or notice that any required information or documents be provided under oath.

The budget proposes to impose a penalty when the CRA obtains a compliance order against a taxpayer and to allow the CRA to seek a compliance order when a person has failed to comply with a requirement to provide foreign-based information or documents. The proposed penalty would be equal to 10 percent of the aggregate tax payable by the taxpayer in respect of the taxation year or years to which the compliance order relates, and will only be applied if the tax owing in respect of one of the taxation years to which the compliance order relates exceeds $50,000.

The budget proposes to expand the applications of the rules that extend the reassessment period (also known as “stop the clock” rules) to cases where a taxpayer, or a person who does not deal at arm’s length with the taxpayer, seeks judicial review of any requirement or notice issued to the taxpayer by the CRA in relation to the audit and enforcement process or during a period of an outstanding notice of non-compliance.

These proposed changes would apply to all statutes administered by the CRA. These amendments would come into force on royal assent of the enacting legislation.

Previously announced tax measures

The budget confirms the government’s intention to proceed with a number of previously announced legislative proposals, including (not an exhaustive list):

• Underused Housing Tax
• Strengthening the Intergenerational Business Transfer Framework
• Modernizing the General Anti-Avoidance Rule (GAAR)
• Substantive CCPCs

Prior to implementing any strategies, individuals should consult with a qualified tax advisor, legal professional or other applicable professional.

While it has been the long-standing practice of the CRA to allow taxpayers to file their tax returns based on proposed legislation, a taxpayer remains potentially liable for taxes under current law in the event that a budget proposal is not ultimately passed. Therefore, if proposed legislation does not become law, it is possible that the CRA may assess or re-assess your tax return based on existing legislation. It is recommended that you consult a qualified tax advisor to assist you in assessing the costs and benefits of proceeding with specific budget proposals as they relate to you.

This document has been prepared for use by the RBC Wealth Management member companies, RBC Dominion Securities Inc. (RBC DS)*, RBC Phillips, Hager & North Investment Counsel Inc. (RBC PH&N IC), RBC Wealth Management Financial Services Inc. (RBC WMFS), Royal Trust Corporation of Canada and The Royal Trust Company (collectively, the “Companies”) and their affiliates, RBC Direct Investing Inc. (RBC DI)* and Royal Mutual Funds Inc. (RMFI)*. *Member – Canadian Investor Protection Fund. Each of the Companies, their affiliates and the Royal Bank of Canada are separate corporate entities which are affiliated. “RBC advisor” refers to Private Bankers who are employees of Royal Bank of Canada and mutual fund representatives of RMFI, Investment Counsellors who are employees of RBC PH&N IC, Senior Trust Advisors and Trust Officers who are employees of The Royal Trust Company or Royal Trust Corporation of Canada, or Investment Advisors who are employees of RBC DS. In Quebec, financial planning services are provided by RMFI or RBC WMFS and each is licensed as a financial services firm in that province. In the rest of Canada, financial planning services are available through RMFI or RBC DS. Estate and trust services are provided by Royal Trust Corporation of Canada and The Royal Trust Company. If specific products or services are not offered by one of the Companies, RBC DI or RMFI, clients may request a referral to another RBC partner. Insurance products are offered through RBC Wealth Management Financial Services Inc., a subsidiary of RBC Dominion Securities Inc. When providing life insurance products in all provinces except Quebec, Investment Advisors are acting as Insurance Representatives of RBC Wealth Management Financial Services Inc. In Quebec, Investment Advisors are acting as Financial Security Advisors of RBC Wealth Management Financial Services Inc. RBC Wealth Management Financial Services Inc. is licensed as a financial services firm in the province of Quebec. The strategies, advice and technical content in this publication are provided for the general guidance and benefit of our clients, based on information believed to be accurate and complete, but we cannot guarantee its accuracy or completeness. This publication is not intended as nor does it constitute tax or legal advice. Readers should consult a qualified legal, tax or other professional advisor when planning to implement a strategy. This will ensure that their individual circumstances have been considered properly and that action is taken on the latest available information. Interest rates, market conditions, tax rules, and other investment factors are subject to change. This information is not investment advice and should only be used in conjunction with a discussion with your RBC advisor. None of the Companies, RMFI, RBC WMFS, RBC DI, Royal Bank of Canada or any of its affiliates or any other person accepts any liability whatsoever for any direct or consequential loss arising from any use of this report or the information contained herein. In certain branch locations, one or more of the Companies may carry on business from premises shared with other Royal Bank of Canada affiliates. Notwithstanding this fact, each of the Companies is a separate business and personal information and confidential information relating to client accounts can only be disclosed to other RBC affiliates if required to service your needs, by law or with your consent. Under the RBC Code of Conduct, RBC Privacy Principles and RBC Conflict of Interest Policy confidential information may not be shared between RBC affiliates without a valid reason. ® / TM Trademark(s) of Royal Bank of Canada. Used under licence. © Royal Bank of Canada 2024. All rights reserved.

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