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  • Adult industry workers – income and work-related deductions

    If you earn your income as an employee in the adult industry, this guide will help you work out what:

    • income and allowances to report
    • you can and can't claim as a work-related deduction
    • records you need to keep.

    Find out about adult industry workers':

    Income – salary and allowances

    Include all the income you receive as an adult industry worker during the income year in your tax return, regardless of when you earn it. This includes:

    Don't include reimbursements.

    Your income statement or payment summary will show your salary, wages and allowances for the financial year.

    Salary and wages

    You must include your salary and wages as income in your tax return. Include any bonuses.

    Allowances

    Include all allowances shown on your income statement or payment summary as income in your tax return.

    While all allowances you receive from your employer are income, you can't always claim a deduction if you receive an allowance – it depends on the situation.

    If you can claim a deduction, the amount of the deduction is not usually the same amount as the allowance you have receive.

    Allowance types, reason and deductibility

    Reason for allowance

    Example of allowance type

    Deductible (Yes or No)

    Compensation for an aspect of your work that is unpleasant, special or dangerous

    Nude allowance

    No

    These allowances don't help you pay for deductible work-related expenses

    Compensation for industry peculiarities

    Attendance before commencement of employment

    No

    These allowances don't help you pay for deductible work-related expenses

    An amount for certain expenses

    Laundry allowance

    Yes

    If you incur deductible expenses

    An amount for special skills

    A first aid certificate

    Yes

    If you incur deductible expenses

     

    Example: allowance is assessable income, no deduction allowable

    Ricky is an employee dancer at an adult entertainment club. As Ricky appears nude or semi-nude, his employer pays him a nude allowance of $25 per week.

    The allowance is shown on Ricky's payment summary at the end of the income year.

    Ricky must declare the allowance as income in his tax return.

    Ricky can't claim a deduction. The allowance he receives compensates him for his special working conditions. The allowance doesn't cover any expenses Ricky might incur.

    End of example

     

    Example: allowance is assessable income, deduction allowed

    Wanda serves drinks in an adult dance club. Wanda must wear a compulsory uniform when she is working. Her uniform is a t-shirt and a black skirt, both which have the club's name on them.

    Wanda's employer gives her the uniform, but Wanda is responsible for laundering it.

    Wanda receives a laundry allowance of $4 per week for laundering her uniform. The allowance is shown on Wanda's income statement at the end of the income year.

    Wanda must declare the allowance as income in her tax return.

    Wanda can claim a deduction for the expenses she incurs to wash and iron her compulsory uniform.

    End of example

    Difference between allowances and reimbursements

    An allowance doesn't include a reimbursement.

    If your employer pays you:

    • an amount based on an estimate of what you might spend, such as paying cents per kilometre if you use your car for work, then it's an allowance
    • for the actual amount of the expense (either before or after you incur the expense), such as paying for the cost of special make-up, it's a reimbursement.

    Allowances not on your income statement or payment summary

    Your employer may not include some allowances on your income statement or payment summary. This can apply to travel allowances and overtime meal allowances paid under an industrial law, award or agreement. You can see these allowances on your payslips.

    If the allowance isn't on your income statement or payment summary, and you:

    • spent the whole amount on deductible expenses, you  
      • don't include it as income in your tax return
      • can't claim any deductions for these expenses
    • spent more than your allowance, you  
      • include the allowance as income in your tax return
      • can claim a deduction for your expenses if you're eligible.

    Reimbursements

    If your employer pays you the exact amount for expenses you incur (either before or after you incur them), the payment is a reimbursement. A reimbursement isn't considered to be an allowance.

    If your employer reimburses you for expenses you incur:

    • don't include the reimbursement as income in your tax return
    • you can't claim a deduction for them.

    Find out about adult industry workers':

      Last modified: 21 Apr 2022QC 18626