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  • Employment income

    You need to include all your employment income (money from your work) on your tax return.

    Employment income is money you receive from working, whether you have one job or more, are full time, part-time or casual. You may be paid cash-in-hand, directly into your bank account, or in another way.

    The types of employment income you need to declare include the following.

    On this page:

    Salary and wages

    The most common type of employment income is salary and wages. Salary and wage payments you need to declare in your tax return, include:

    • your normal weekly, fortnightly or monthly pay
    • JobKeeper and stand-down payments your employer paid due to COVID-19
    • commissions
    • bonuses – including retention bonuses to remain with your employer
    • money for part-time or casual work
    • parental leave pay
    • dad-and-partner pay
    • payments from    
      • an income protection policy
      • a sickness or accident insurance policy
      • a workers compensation scheme.
    • pay and allowances for continuous full-time service in the Australian Naval, Army or Air Force Reserve
    • foreign employment income – if you are an employee of an Australian Government agency (and not a member of a disciplined force), include income you earn from delivering Australian official development assistance.

    If you receive payments due to COVID-19 from your employer you may need to declare this income on your tax return, see Tax on employment payments for further information.

    See also:

    Allowances and other employment income

    You may receive other payments in connection with your employment that you need to declare in your tax return, such as:

    • pandemic allowances your employer pays due to COVID-19
    • allowances your employer pays and reports separately on your income statement, including    
      • car, travel, clothing and laundry
      • working conditions – for example, danger, height, dirt or hard lying
      • qualifications or special duties – for example, first aid certificate or safety officer
    • tips, gratuities and payments for your services
    • consultation fees and payments for voluntary services
    • jury attendance fees.

    Your employer may also pay you an allowance that you do not need to include as income in your tax return. These are travel allowances or overtime meal allowances that are paid to you under an industrial law, award or agreement. You can see these allowances on your payslips.

    If the allowance is not on your income statement or payment summary, and you:

    • spent the whole amount on deductible expenses, you
      • don't include it as income in your tax return
      • can't claim any deductions for these expenses
    • spent more than your allowance, you
      • include the allowance as income in your tax return
      • can claim a deduction for your expense, if you're eligible.

    Lump sum payments

    A lump sum payment is a one-time payment that is taxed and reported differently to your salary and wage income. You include lump sum payments as assessable income in your tax return in the financial year you receive the payment.

    You may receive a lump sum payment:

    • when you leave a job, such as
      • an employment termination payment (ETP)
      • genuine redundancy payment
      • early retirement scheme payment that exceeds the tax-free limit
    • for unused annual leave, long service leave or special leave you may have been entitled to when you leave a job
    • in arrears (known as back pay or lump sum payments in arrears) for money your employer owes you from an earlier income year.

    If you receive a lump sum payment in arrears, you don't need to amend prior year tax returns. Tax offsets are in place for lump sum payments in arrears which prevents you paying too much tax in the year you receive the payment.

    See also:

    Reportable fringe benefits and super contributions

    Other amounts that you need to declare in your tax return include employment-related amounts you receive for:

    • reportable fringe benefits given to you by your employer (such as, a work car for private purposes, a cheap loan or free private health insurance)
    • reportable super contributions made on your behalf by your employer.

    You don't have to pay tax on these amounts. We use these amounts to work out whether you are eligible to receive a range of government benefits and tax offsets.

    See also:

    Last modified: 21 May 2021QC 31914