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  • 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.

    Find out about agricultural workers':

    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.

    Find out about agricultural workers':

      Last modified: 09 Jun 2022QC 61560