Taxation Determination

TD 93/196

Income tax: do payments received by an employee from an employer in respect of motor vehicle expenses incurred by an employee need to be considered when ascertaining the rebate for personal superannuation contributions to which the employee may be entitled under section 159SZ, and the repealed section 159TL, of the Income Tax Assessment Act 1936 ?

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FOI status:

may be releasedFOI number: I 1216295

This Determination, to the extent that it is capable of being a 'public ruling' in terms of Part IVAAA of the Taxation Administration Act 1953 , is a public ruling for the purposes of that Part. Taxation Ruling TR 92/1 explains when a Determination is a public ruling and how it is binding on the Commissioner. Unless otherwise stated, this Determination applies to years commencing both before and after its date of issue. However, this Determination does not apply to taxpayers to the extent that it conflicts with the terms of a settlement of a dispute agreed to before the date of issue of the Determination (see paragraphs 21 and 22 of Taxation Ruling TR 92/20).

1. Yes, where the employee receives an allowance or his or her motor vehicle expenses are reimbursed on a cents per kilometre basis. Dependent on the level of eligible personal superannuation contributions (or rebatable contributions in the case of the repealed section 159TL), the amount of rebate allowable may be based on the amount of the employee's assessable income. Therefore it is necessary to determine how much, if any, of the amounts received in respect of motor vehicle expenses form part of the employee's assessable income.

2. Motor vehicle expenses payments are included in the assessable income of an employee if:

they are received as an allowance; or
they are received as a cents per kilometre reimbursement.

Most other forms of reimbursement are exempt income and therefore should not be included in the employee's assessable income when calculating a superannuation rebate.

3. A payment is an allowance when a predetermined amount is paid by the employer to cover an employee's estimated expense. It is paid regardless of whether the employee incurs the expected expense (see, paragraph 2 at TR 92/15).

4. A payment is a reimbursement when an employee is compensated exactly for an expense already incurred although not necessarily disbursed (see, paragraph 3 of TR 92/15).

Example 1 Mark, an auditor, is entitled to payments from his employer for expenses incurred in using his own vehicle to visit clients. To claim the amount from his employer, he is required to produce receipts or invoices.The payments made to Mark are reimbursements. He is compensated exactly for his expenses and would not be entitled to payment if he were unable to prove that he incurred the expenses. As such the payments are not included in his assessable income.

Example 2 Serge is an employee of Travel Insurance Ltd. Apart from his usual salary, he is paid an amount to cover travel expenses. The travel expenses are paid at a cents per kilometre rate on the distance shown in log book records kept by Serge.The payments of travel expense based on cents per kilometre are included in his assessable income.

Example 3 Madeleine, who occasionally uses her car for work related trips during business hours, receives a set amount per month to compensate her for expenses incurred in using her own vehicle. The amount she receives is based on an average monthly figure derived from a log book she kept for her employer in a prior year. She is not required to provide evidence for such use in order to keep receiving the payments.The payments Madeleine receives are an allowance and included in her assessable income.

Commissioner of Taxation

Previously issued as Draft TD 93/D123


ATO references:
NO NOR J91/2/1

ISSN 1038 - 8982

Related Rulings/Determinations:

IT 2614;
TR 92/15

Subject References:

Legislative References:
FBTAA section 22

TD 93/196 history
  Date: Version: Change:
  14 October 1993 Original ruling  
You are here 29 November 2006 Original ruling + note Repeal provision note