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Income and allowances

Last updated 7 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 as a doctor, specialist or medical professional during the income year in your tax return, this includes:

  • salary and wages, including cash or bonus payments
  • allowances
  • other income, such as compensation or insurance payments – for example, payments made under an income protection insurance policy to replace your 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, phone expenses
  • as compensation for an aspect of your work such as working conditions or industry peculiarities – for example, being on call
  • 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're 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 a deductible work-related expense, to claim a deduction you:

  • include the allowance as income in your tax return
  • include a 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 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

Managerial allowance

On call allowance

No

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

An amount for certain expenses

Motor vehicle 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 industry peculiarity

Bill is a doctor 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 into work over the period he is on call. The allowance doesn't help pay for work-related expenses.

End of example

 

Example: allowance is assessable income, deduction allowable

Breanna is a physiotherapist. During the income year, Breanna uses her own car to travel:

  • from her regular place of work to a venue to attend training
  • to visit clients.

Breanna's employer pays her 80c per kilometre when she uses her car for work purposes. At the end of the year, her income statement shows she was paid an allowance of $256 for using her car for work (320 kms × 0.80 = $256).

Breanna must include the car allowance as income in her tax return.

Breanna can claim a deduction for the cost of using her car for work purposes. She can't claim the amount of the allowance she receives. Breanna must calculate the amount of the deduction using the records she keeps whenever she uses her own car for work purposes.

In the past year Breanna has kept a record of the work trips she did using her own car, but she doesn't keep a logbook. Her records show she travelled 320 kms for work purposes.

As Breanna has not kept a logbook, she uses the cents per kilometre method to claim a deduction. The cents per kilometre method rate for the income year 2022–23 is 78c per kilometre.

Breanna claims a deduction of $249.60. Breanna calculates her deduction as 320 kms × $0.78 = $3,287.70.

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:

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

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