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Income and allowances

Last updated 2 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 community support worker or direct carer 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 all allowances your employer reports on your income statement or payment summary as income in your tax return.

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, being on call for work
  • 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.

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
  • can claim the work expenses you incur
  • 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 have 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 the allowance and if you can claim a deduction

Reason for allowance

Example of allowance type

Deduction (Yes or No)

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

Heat allowance

On call allowance

No
These allowances don't help you pay for deductible work-related expenses

An amount for certain expenses

Telephone allowance

Yes
If you incur deductible expenses

An amount for special skills

A first aid certificate

Yes
If you incur deductible expenses

 

Example: allowance as compensation for industry peculiarities

Bill works at an aged care home. Bill generally works from Monday to Friday each week but is also on call on the third weekend of every month.

Even if he isn't called in when he is on call, Bill receives an allowance from his employer. At the end of the income year, the total allowance is shown on his payment summary.

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

Bill can't claim a deduction as he doesn't incur any deductible expenses. The allowance compensates Bill for having to be ready to go to work when on call. The allowance isn't to help pay for work-related expenses.

End of example

 

Example: allowance assessable, deduction allowed

Beth works as a community support worker and is required to wear a compulsory uniform. Beth's employer pays her a uniform allowance of $265.

The allowance is shown on her income statement at the end of the income year.

During the income year, Beth spent $290 for her compulsory uniform.

In her tax return, Beth:

  • must include the uniform allowance ($265) as income
  • can claim a deduction for the expenses she incurs for her compulsory uniform ($290).
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 community support workers and direct carers':

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