Amounts you do and don't include
You must include all the income you receive during the income year as a teacher or education professional in your tax return, which 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 payment summary will show all 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, vehicle allowance
- as compensation for an aspect of your work such as working conditions or industry peculiarities – for example, living and working in a remote area
- 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 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 |
Leadership allowance Living and working in a remote area |
No These allowances don't help you pay for deductible work-related expenses |
|
An amount for certain expenses |
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
Mark is a secondary school teacher. Mark is the head of the Science department. He receives an annual allowance from his employer for having the added responsibility of being in charge of the department. 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 is to compensate Mark for a special aspect of his work. It is not to cover any expenses he might incur.
End of example
Example: deductible allowance
Bronwyn is a TAFE teacher. During the income year, Bronwyn uses her own vehicle to travel from the TAFE she teaches at to an external venue where she takes students through practical aspects of the courses she teaches.
Bronwyn's employer pays her 90c per kilometre when she uses her car for work purposes. At the end of the year, her income statement shows she received an allowance of $586.80 for using her car for work (652 kms × $0.90 = $586.80). Bronwyn must include the car allowance as income in her tax return.
Bronwyn can claim a deduction for the cost of using her car for work purposes. She can't claim the amount of the allowance received. Rather she must calculate the amount of the deduction based on the records she keeps whenever she uses her own car for work purposes.
In the past year Bronwyn has kept a record of the work trips she did using her own car, but she doesn't keep a logbook. Her records show she used her car to travel 652 kms for work purposes.
As Bronwyn has not kept a logbook, she uses the cents per kilometre method to claim a deduction. The cents per kilometre method rate for the 2023–24 income year is 85c per kilometre.
Bronwyn claims a deduction of $554.20. Bronwyn calculates her deduction as 652 kms × $0.85 = $554.20.
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 you for the expenses you incur:
- you don't include the reimbursement as income in your tax return
- you can't claim a deduction for them.
Find out about teachers and education professionals: