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  • Real estate employees – income and work-related deductions

    If you earn your income as a real estate employee, 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.

    Real estate employees include salespeople and property managers employed in the real estate agent industry.

    Find out about real estate employees':

    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 payment summary will show all your salary, wages (including commissions) 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: bonus for salesperson of the year

    Dan is a salesperson for a real estate agency. Each calendar year, Dan's employer offers a bonus of $5,000 to the salesperson who lists and sells the most properties. For the calendar year ending 31 December 2021, Dan is awarded the bonus of $5,000.

    Dan's employer reports the bonus on his income statement for the 2021–22 income year.

    Dan must include the $5,000 bonus as income as income in his 2021–22 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

    Health and safety representative

    No

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

    Compensation for industry peculiarities

    Working in extreme weather conditions

    No

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

    An amount for certain expenses

    Mobile phone 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

    Mark is a real estate agent and is the health and safety representative for his office. Mark's employer pays him an allowance for each week during the year that he holds that position.

    At the end of the income year, his employer reports the allowance on his income statement.

    Mark must include the amount of the allowance in his tax return, but he can't claim a deduction for any expenses against the allowance.

    The allowance compensates Mark for his special additional duties. It is not to cover any expenses he might incur.

    End of example

     

    Example: allowance is assessable income, deduction allowable

    Ronaldo is a property manager. His employer requires him to wear a compulsory uniform which he must buy, launder and repair.

    Ronaldo's employer pays him a uniform allowance which is shown on his income statement. Ronaldo regularly washes his uniform and in winter, he has his jacket dry cleaned.

    Ronaldo must declare the uniform allowance as income in his tax return.

    Ronaldo can claim a deduction for cost of buying, laundering and dry cleaning his compulsory uniform.

    End of example

    Difference between allowances and reimbursements

    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
      • you 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.

    Example: reimbursement of mobile phone expenses

    Michelle is a property management agent. Michelle uses her own phone for work purposes. At the end of each month, Michelle highlights the work phone calls on her bill and lodges a reimbursement claim with her employer. Michelle's employer reimburses her for the cost of her work phone calls.

    Michelle doesn't include the amount of the reimbursement as income in her tax return and she can't claim a deduction for the cost of her work-related mobile phone expenses.

    End of example

    Find out about real estate employees':

      Last modified: 24 May 2022QC 24417