| Disclaimer This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law. You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4. |
Edited version of your private ruling
Authorisation Number: 1012548198861
Ruling
Subject: Assessability of allowance
Question
Is the allowance you receive assessable income?
Answer
Yes.
This ruling applies for the following period
Year ending 30 June 2013
Year ending 30 June 2014
Year ending 30 June 2015
Year ending 30 June 2016
Year ending 30 June 2017
The scheme commenced on
1 July 2012
Relevant facts
You do not work at your employer's premises.
You are required to be away from your usual place of residence for work.
You live and work at these locations which could be up to 6 to 8 months at a time.
Your employer pays for your accommodation, which could be in the form of a hotel/unit/cabin or rental house.
You are required to share accommodation with other workers.
Your employer pays you a travel allowance of $X per day to cover the costs of all your meals and incidentals.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 15-2
Income Tax Assessment Act 1936 Section 23L
Fringe Benefits Tax Assessment Act 1986
Reasons for decision
Section 15-2 of the Income Tax Assessment Act 1997 (ITAA 1997) states that your assessable income includes the value to you of all allowances, gratuities, compensation, benefits, bonuses and premiums provided to you in respect of, or for or in relation directly or indirectly to, any employment of or services rendered by you.
Section 23L of the Income Tax Assessment Act 1936 states that income derived by a taxpayer by way of provision of a fringe benefit within the meaning of the Fringe Benefits Tax Assessment Act 1986 (FBTAA) is not assessable income and is not exempt income of the taxpayer.
Miscellaneous Taxation Ruling MT 2030 provides guidance in relation to the distinction between a living away from home allowance and a travel allowance. While the expenses that they are intended to compensate for may be similar - meals and accommodation - the circumstances in which the allowances are paid are essentially different.
A living away from home allowance is paid where an employee has moved and taken up temporary residence away from his or her usual place of residence so as to be able to carry out employment duties for a time at the new (but temporary) workplace. There is a change of job location and an actual change of residence to a place at or near that location.
Therefore, for an allowance to be considered and accepted as a living away from home allowance, the employer must determine whether the employee is bona fide living away from home during the period of his employment because of the nature of their duties.
If an employer determines that an employee is required to live away from home to carry out his employment duties and the employee does not have a transitory lifestyle referred to in MT 2030, then any payments or reimbursements by way of a living away from home allowance will be subject to taxation obligations under the FBT legislation. Such FBT obligations remain the responsibility of the employer and all necessary records must be kept.
A travel allowance, on the other hand, is paid because the employee is travelling in the course of performing his or her job. Travel allowances are often paid for comparatively short periods. Where the period away does not exceed 21 days the allowance will generally be treated as a travel allowance.
In your case, you work for Y days before returning home, the allowance is not subject to fringe benefits tax and you have not provided your employer with a declaration relating to living away from home. Additionally, your employer has included the allowance on your PAYG summary as a taxable allowance which indicates that they consider the payment to be assessable.
Therefore, as the allowance is not a fringe benefit, it is assessable under section 15-2 of the ITAA 1997.
Copyright notice
© Australian Taxation Office for the Commonwealth of Australia
You are free to copy, adapt, modify, transmit and distribute material on this website as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).
