Agricultural workers – income and work-related deductions
If you earn your income as an employee agricultural worker, 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.
This information is for employees who work in agriculture. It doesn’t apply to hobby farmers or those running a business in the agriculture industry.
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Income – salary and allowances
Include all the income you receive during the income year in your tax return, this includes:
Don't include reimbursements.
Your income statement or a payment summary will show your salary, wages and allowances for the income 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 receive.
Allowance types, reasons and deductibility
Reason for allowance
|
Example of allowance type
|
Deduction (Yes or No)
|
Compensation for an aspect of your work that is unpleasant, special or dangerous
|
Handling pesticides
|
No
These allowances don't help you pay for deductible work-related expenses
|
Compensation for industry peculiarities
|
Remote area allowance
|
No
These allowances don't help you pay for deductible work-related expenses
|
An amount for certain expenses
|
Tool and equipment allowance
|
Yes
If you incur deductible expenses
|
An amount for special skills
|
A first aid certificate
|
Yes
If you incur deductible expenses
|
Example: allowance assessable, no deduction
Mario is a farm hand on a produce farm. Mario's role requires him to spray weeds around the produce trees. Mario's employer pays him an allowance of $1.35 per hour for the time he spends using pesticides.
At the end of the income year, Mario's employer shows the allowance on his income statement.
Mario must include the allowance as income in his tax return.
Mario can't claim a deduction because he doesn't incur any expenses. The allowance compensates Mario for an aspect of his work that is dangerous. It is not to help him pay for deductible work-related expenses.
End of example
Example: allowance assessable, deduction allowed
Bronwyn is a farm manager. Her employer owns a farm on 50 acres of land. During the income year, Bronwyn uses her own vehicle to transport herself and the other farm workers other areas of the farm. Bronwyn's employer pays her 80 cents per kilometre when she uses her car for work purposes.
At the end of the year, her income statement shows she receives an allowance of $3,372 for using her car for work (4215kms × 50 cents).
Bronwyn must include the car allowance as income in her tax return.
Bronwyn can claim a deduction for the cost of using her car for work purposes. She can't claim the amount of the allowance received. Rather she must calculate the amount of the deduction based on the records she keeps whenever she uses her own car for work purposes.
In the past year Bronwyn has kept a record of the work trips she did using her own car, but she doesn't keep a logbook. Her records show she used her car to travel 4215kms for work purposes.
As Bronwyn has not kept a logbook, she uses the cents per kilometre method to claim a deduction. The cents per kilometre method rate for the year is 72 cents per kilometre. Bronwyn claims a deduction of $3,034.80.
End of example
Difference between allowances and reimbursements
An allowance does not 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 petrol you use if you use your car for work, it's a reimbursement.
Allowances not shown 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 expense, 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. We don't consider a reimbursement 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.
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