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  • Employment income

    Employment income is money you receive from working. You may be paid cash-in-hand, directly into your bank account, or in another way.

    You need to make sure you include all your employment income on your tax return regardless of whether you have one job or more, are full time, part-time or casual.

    This page provides information on the types of employment income you need to declare.

    On this page:

    Salary and wages

    The most common type of employment income is salary and wages. Salary and wage payments include:

    • your normal weekly, fortnightly or monthly pay
    • JobKeeper and stand-down payments your employer paid due to COVID-19
    • commissions
    • bonuses – including retention bonuses to remain with your employer
    • money for part-time or casual work
    • parental leave pay
    • dad-and-partner pay
    • payments from  
      • an income protection policy
      • a sickness or accident insurance policy
      • a workers compensation scheme.
       
    • pay and allowances for continuous full-time service in the Australian Naval, Army or Air Force Reserve
    • foreign employment income – if you are an employee of an Australian Government agency (and not a member of a disciplined force), include income earned from delivering Australian official development assistance.

    If you received a COVID-19 related payment from your employer and are unsure if you need to declare this income on your tax return, see Tax on employment income for further information.

    See also:

    Allowances and other employment income

    You may receive other payments in connection with your employment such as:

    • allowances – separately identified payments made to you by your employer including  
      • car, travel, clothing and laundry
      • working conditions – for example, danger, height, dirt or hard lying
      • qualifications or special duties – for example, first aid certificate or safety officer
       
    • pandemic allowances your employer paid due to COVID-19
    • tips, gratuities and payments for your services
    • consultation fees and payments for voluntary services
    • jury attendance fees.

    If you received a travel allowance or overtime meal allowance paid under an industrial law, award or agreement, you don't have to include it on your tax return. The payment must meet all of the following conditions:

    • It was not shown on your income statement or payment summary.
    • It doesn't exceed the Commissioner of Taxation's reasonable allowance amount.
    • You spent the whole amount on deductible expenses.

    Lump sum payments

    A lump sum payment is a one-time payment that is taxed and reported differently to your salary and wage income. Lump sum payments are assessable in the year you receive them. You must include the lump sum amount in your tax return in the financial year you receive the payment.

    You may receive a lump sum payment:

    • when you leave a job (such as, an employment termination payment (ETP), genuine redundancy or early retirement scheme payment that exceeds the tax-free limit)
    • for unused annual leave, long service leave or special leave you may have been entitled to when you leave a job
    • in arrears (known as back pay or lump sum payments in arrears) for money owed to you from an earlier income year.

    If you receive a lump sum payment in arrears, you don't need to amend prior year tax returns. Tax offsets are in place for lump sum payments in arrears which prevents you paying too much tax in the year you receive the payment.

    See also:

    Reportable fringe benefits and super contributions

    Other employment-related income includes:

    • reportable fringe benefits given to you by your employer (such as, a work car for private purposes, a cheap loan or free private health insurance)
    • reportable super contributions made on your behalf by your employer.

    You don't have to pay tax on these items but they are used to work out whether you are eligible to receive a range of government benefits and tax offsets.

    See also:

    Last modified: 06 Oct 2020QC 31914