Amounts you do and don't include
You must include all the income you receive during the income year as a hairdresser or beauty professional in your tax return, this includes:
- salary and wages, including cash or bonus payments
- allowances
- 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 a payment summary will show all your salary, wages and allowances for the income year.
Example: bonuses
Kerrie is an employee hairdresser. Every quarter, Kerrie's salon provides a bonus of $500 to the best performing hairdresser. They base their decision on customer feedback and the dollar value of products the hairdressers sell and the services they provide during the quarter.
For the quarter ending June 2024, Kerrie is awarded the bonus of $500. Kerrie's employer shows the amount separately on her income statement.
When Kerrie lodges her income tax return for the 2023–24 income year, she must include the bonus of $500 at Allowances, earnings, tips, directors' fees etc in her income tax return.
End of exampleAllowances
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, tools and equipment
- as compensation for an aspect of your work such as working conditions or industry peculiarities – for example, working a public holiday
- 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 or payment summary. Find out about declaring income and claiming deductions for Allowances not on your income statement.
Allowances not on your income statement or payment summary
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 or payment summary, 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 have 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 |
Manager's allowance Holiday shifts |
No These allowances don't help you pay for deductible work-related expenses |
|
An amount for certain expenses |
Overtime meal allowance |
Yes If you incur deductible expenses |
|
An amount for special skills |
A first aid certificate |
Yes If you incur deductible expenses |
Example: allowance assessable, no deduction
Mario works in a beauty salon. Mario is also the manager of the salon. Mario's employer pays him an allowance $70 per week to compensate him for the additional duties he has as the manager. At the end of the income year, Mario's employer shows his total allowance on his income statement.
Mario must include the allowance as income in his tax return.
Mario can't claim a deduction because he doesn't incur any deductible expenses. The allowance compensates Mario for the additional duties he takes on as a manager. It isn't to help him pay for any work-related expenses.
End of example
Example: allowance assessable, deduction allowable
Wendy is a hairdresser. Wendy's employer requires all employees to wear an apron with their name printed across it. The aprons protect Wendy's clothes while she is working.
Wendy's employer doesn't provide the aprons to Wendy but they pay her a clothing allowance of $200. Wendy buys 2 new aprons during the income year at a cost of $120.
At the end of the income year, Wendy's employer shows the total amount of the clothing allowance on her income statement.
Wendy must include the allowance of $200 as income in her tax return.
Wendy can claim a deduction of $120 in her tax return for the cost of the aprons.
End of exampleReimbursements
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 is not an allowance.
If your employer reimburses for expenses you incur:
- you don't include the reimbursement as income in your tax return
- you can't claim a deduction for the expense.
Find out about employee hairdressers and beauty professionals: