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Income and allowances

Last updated 5 June 2023

Income and allowance amounts you need to include in your tax return and amounts you don’t include.

Amounts you do and don't include

You must include all the income you receive during the income year as an employee in the adult industry in your tax return, this includes:

  • salary and wages, including cash-in-hand cash tips or gratuities, and bonus payments
  • allowances
  • compensation and insurance payments – for example, payments made under an income protection insurance policy to replace salary and wages.

Don't include as income any reimbursements you receive.

Your income statement or a payment summary will show all your salary, wages and allowances for the income year.

Allowances

You must include allowances your employer reports on your income statement or payment summary as income in your tax return. You can claim a deduction for work expenses you incur and pay for with the allowance.

An allowance is where your employer pays you an amount as an estimate of costs you might incur:

  • to help you pay for a work expense – for example, tools and equipment
  • as compensation for an aspect of your work such as working conditions or industry peculiarities – for example, attendance before commencement of employment
  • as an amount for having special duties, skills or qualifications – for example, first aid qualifications.

Your employer may not include some allowances on your income statement. Find out about declaring income and claiming deductions for Allowances not on your income statement.

Example: allowance for laundry expenses

Wanda serves drinks in an adult dance club. Wanda must wear a compulsory uniform when she is working. Her uniform is a t-shirt and a black skirt, both which have the club's name on them.

Wanda's employer gives her the uniform, but Wanda is responsible for laundering it.

Wanda receives a laundry allowance of $4 per week for laundering her uniform. The allowance is shown on Wanda's income statement at the end of the income year.

Wanda must declare the allowance as income in her tax return.

Wanda can claim a deduction for the expenses she incurs to wash and iron her compulsory uniform.

End of example

Allowances not on your income statement

If you receive an allowance from your employer, it does not automatically mean you can claim a deduction.

Your employer may not include some allowances on your income statement, you will find these amounts on your payslip. You don't need to declare these allowances as income in your tax return, unless you are claiming a deduction. Examples include travel allowances and overtime meal allowances.

If you spend the allowance amount on work expenses, you:

  • don't include it as income in your tax return
  • can't claim any deductions for the work expenses the allowance covers.

If you're not claiming a deduction, you don't need to keep any records of the amounts you spend.

If you spend your allowance on work expenses, to claim a deduction you    

  • include the allowance as income in your tax return
  • include a can claim for the work expenses you incur in your tax return
  • must have records of your expenses.

If you can claim a deduction, the amount of the deduction is not usually the same amount as the allowance you receive.

Allowances and claiming a deduction

The following table sets out allowances you may receive and when you can claim a deduction.

Allowance types, reason for allowance and if you can claim a deduction

Reason for allowance

Example of allowance type

Deductible (Yes or No)

Compensation for an aspect of your work that is unpleasant, special or dangerous, or for industry peculiarities

Nude allowance, or

Attendance before commencement of employment

No

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

An amount for certain expenses

Laundry allowance

Yes

If you incur deductible expenses

An amount for special skills

A first aid certificate

Yes

If you incur deductible expenses

 

Example: allowance for working conditions

Ricky is an employee dancer at an adult entertainment club. As Ricky appears nude or semi-nude, his employer pays him a nude allowance of $25 per week.

The allowance is shown on Ricky's payment summary at the end of the income year.

Ricky must declare the allowance as income in his tax return.

Ricky can't claim a deduction. The allowance he receives compensates him for his special working conditions. The allowance doesn't cover any expenses Ricky might incur.

End of example

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.

A reimbursement isn't considered to be an allowance.

If your employer reimburses you for expenses you incur:

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

Find out about adult industry workers':

QC18626