Allowances paid to Employees

Allowances and earnings from your payer may include:

  • car, travel or transport allowances
  • award transport payments
  • allowances for tools, clothing or laundry
  • dirt, height, site, risk, meal or entertainment allowances
  • allowances for qualifications (for example, a first aid certificate)
  • any reimbursement of car expenses calculated by reference to the distance travelled by the car (this is an exempt car expense payment benefit for fringe benefits tax purposes).

When must Travel Allowances and Award Overtime Meal Allowances be shown on Employee Payment Summaries (group certificates)? Payers (employers) do not have to show bona fide travel allowances paid for travel away from an employee’s home in the course of your duties as an employee or bona fide overtime meal allowances paid under an industrial law, award or agreement on payment summaries unless the allowances exceed the Commissioner’s reasonable allowance amounts.

The reasonable overtime meal allowance for the 2007-2008 year is $22.60 per meal. To find out what are the reasonable travel and meal allowance expense amounts for 2007-2008 and 2008-2009, refer to TD 2007/21 and TD 2008/18, respectively or contact Eclipse Accounting Group.

When must Employees declare Allowances in their income tax returns?

Where a travel or overtime meal allowance which does not exceed the reasonable amounts is not shown on the payment summary, and it has been fully spent on deductible expenses, neither the allowances nor the expenses need be shown on the employee’s tax return.
If an amount less than the allowance has been spent, the income tax return must include the allowance and the expense claimed. Whenever a claim is made for overtime meal or travel allowance expenses, the allowance must also be included in the tax return. You cannot automatically claim a deduction just because you received an allowance.

The above advice is intended as a guide only. Please contact Eclipse Accounting Group if you require additional information or clarification on any issues or rules.