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  • Hairdressers and beauty professionals – income and work-related deductions

    If you earn your income as an employee hairdresser or beauty professional, 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 employee hairdressers and beauty professionals':

    Income – salary and allowances

    Include all the income you receive during the income year in your tax return, which includes:

    Don't include reimbursements.

    Your income statement or a payment summary will show all 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.

    Example: bonuses

    Kerrie is an employee hairdresser. Every quarter, Kerrie's salon provides a bonus of $500 to the best performing hairdresser. They base their decision on customer feedback and the dollar value of products the hairdressers sell and the services they provide during the quarter.

    For the quarter ending June 2022, Kerrie is awarded the bonus of $500. Kerrie's employer shows the amount separately on her income statement.

    When Kerrie lodges her income tax return for the 2021–22 income year, she must include the bonus of $500 at Allowances, earnings, tips, directors' fees etc in her income tax return.

    End of example

    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

    Manager's allowance

    No

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

    Compensation for industry peculiarities

    Working and holiday shifts

    No

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

    An amount for certain expenses

    Overtime meal 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 works in a beauty salon. Mario is also the manager of the salon. Mario's employer pays him an allowance $70 per week to compensate him for the additional duties he has as the manager. At the end of the income year, Mario's employer shows his total 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 deductible expenses. The allowance compensates Mario for the additional duties he takes on as a manager. It isn't to help him pay for any work-related expenses.

    End of example

     

    Example: allowance assessable, deduction allowable

    Wendy is a hairdresser. Wendy's employer requires all employees to wear an apron with their name printed across it. The aprons protect Wendy's clothes while she is working.

    Wendy's employer doesn't provide the aprons to Wendy but they pay her a clothing allowance of $200. Wendy buys 2 new aprons during the income year at a cost of $120.

    At the end of the income year, Wendy's employer shows the total amount of the clothing allowance on her income statement.

    Wendy must include the allowance of $200 as income in her tax return.

    Wendy can claim a deduction of $120 in her tax return for the cost of the aprons.

    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 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 for expenses you incur:

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

    Find out about employee hairdressers and beauty professionals:

      Last modified: 18 Aug 2022QC 51239