Income and allowance amounts you need to include in your tax return and amounts you don’t include.
You must include all the income you receive during the income year as a sales and marketing manager in your tax return, this includes:
- salary and wages, including cash or bonus payments
- 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 payment summary will show all your salary, wages including commissions and allowances for the income year.
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, vehicle allowance
- as compensation for an aspect of your work such as working conditions or industry peculiarities – for example, remote area 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.
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.
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
Remote area allowance
These allowances don't help you pay for deductible work-related expenses
An amount for certain expenses
If you incur deductible expenses
An amount for special skills
A first aid certificate
If you incur deductible expenses
Example: allowance is assessable income, no deduction allowable
Emerson is a sales manager a pharmaceutical company. When he has to travel away from his home overnight to a regional area, he is usually only away between his normal working week, Monday to Friday. However, when he goes to one particularly large regional area, he is away from home for 2 weeks.
When Emerson takes these trips, his employer pays him a weekend allowance to compensate him for being away over the weekend.
At the end of the income year, the weekend allowance is shown on Emerson's income statement.
Emerson must declare the weekend allowance as income on his tax return.
Emerson can't claim a deduction. The allowance compensates him for an unpleasant aspect of his work. It is not to cover work-related expenses that Emerson might incur.End of example
Example: allowance is assessable income, deduction is allowable
Bronwyn is a sales and marketing manager for a clothing chain. During the income year, Bronwyn uses her own vehicle to travel:
- directly from her home or her office to the various clothing stores in the chain
- to a training venue to attend training.
Bronwyn'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 $3,384 for using her car for work (4,230 kms × $0.80 = $3,384).
Bronwyn must include the car allowance as income in her tax return.
Bronwyn 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. Bronwyn 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 Bronwyn 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 4,230 kms for work purposes.
As Bronwyn has not kept a logbook, she uses the cents per kilometre method to claim a deduction. The cents per kilometre method rate for the 2021–22 income year is 78 cents per kilometre.
Bronwyn claims a deduction of $3,299.40. Bronwyn calculates her deduction as 4,230 kms × $0.78 = $3,29940.End of example
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.
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