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Income and allowances

Last updated 13 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 mining site industry in your tax return, this includes:

  • salary and wages, including cash or bonus payments
  • allowances.

Don't include as income any reimbursements you receive.

Your income statement or 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, tool allowance
  • as compensation for an aspect of your work such as working conditions or industry peculiarities – for example, underground allowance
  • 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 allowances 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

Industry allowance or Underground allowance

No

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

An amount for certain expenses

Tool 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

Joe is a leading hand on a mine site. For each week he is a leading hand, his employer pays him an allowance. At the end of the income year, the allowance is shown on Joe's income statement.

Joe must declare the leading hand allowance as income in his tax return.

Joe can't claim a deduction because he doesn't incur any deductible expenses. The allowance compensates him for his special duties. It is not to help pay for any work-related expenses that Joe may incur.

End of example

 

Example: allowance is assessable income, no deduction allowable

Wei-Li is an electrician on a mine site. Wei-Li's employer doesn't supply her with the tools she requires to carry out her duties. Instead, they pay her a weekly allowance of $16 which is shown on her income statement at the end of the income year.

During the income year, Wei-Li buys some hand tools which she uses only for carrying out her employment duties. The hand tools cost of $243.

Wei-Li must declare the total allowance of $832 ($16 × 52 weeks = $832) as income in her tax return.

Wei-Li can claim a deduction of $243 for the hand tools in her tax return.

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 them.

Find out about mining site employees:

QC19678