Income and allowances

Amounts you do and don't include

You must include all the income you receive during the income year from being an employee office worker in your tax return, this includes:

salary and wages, including cash or bonus payments
allowances.

Don't include as income any reimbursements you receive.

Your income statement or a payment summary will show your salary, wages and allowances for the income year.

Allowances

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, car and vehicle expenses
as compensation for an aspect of your work such as working conditions or industry peculiarities – for example, health and safety representative 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 or your 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 receive.

Allowances and claiming a deduction

The following table sets out allowances you may receive and when you can claim a deduction.

Allowance types, reason for the allowance and if 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	Health and safety representative allowance Higher duties allowance	No These allowances don't help you pay for deductible work-related expenses
An amount for certain expenses	Car or vehicle 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 allowable

Mark is the health and safety representative for his office. Mark's employer pays him an allowance for each week during the year that he holds that position.

At the end of the income year, the allowance is on his income statement.

Mark must include the amount of the allowance in his tax return, but he can't claim a deduction for any expenses against the allowance.

The allowance compensates Mark for his special additional duties. It's not to cover any expenses he might incur.

End of example

Example: allowance assessable, deductible allowable

Ronaldo's employer requires him to wear a compulsory uniform. Ronaldo is also required to launder and repair his compulsory uniform when necessary.

Ronaldo's employer pays him a uniform allowance which is on his income statement. Ronaldo regularly washes his uniform and in winter, he also dry-cleans his jacket.

Ronaldo must declare the uniform allowance as income in his tax return. He can also claim a deduction for cost of laundering and dry cleaning his compulsory uniform.

End of example

Reimbursements

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 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 the expenses.

Find out about office workers':