Allowances paid with employment income 108-22070639

The type of allowance a customer is paid by their employer, and how often they are paid it, determines if it is assessable income. If the allowance is assessable it must be included in the customer’s fortnightly income report.

Is the allowance paid to the customer for:

• a task/working conditions allowance? See Resources for examples and go to Step 2
• a work related expense? Go to Step 3

Allowances paid for a task that involves additional responsibility or inconvenient work conditions are assessed as employment income and the gross amount must be included in the customer’s fortnightly income report.

Go to Step 6.

If the work-related expense allowance is paid to the customer:

• to cover a one-off or irregular work-related expense, go to Step 4
• regularly throughout the year for ongoing work-related expenses, see Resources for examples and go to Step 5

Is the allowance amount paid more than the work related expense?

• Yes:
• The difference between the allowance amount paid and the work related expense is assessed as employment income
• The extra amount needs to be included in the customer’s fortnightly income report
• The amount of allowance equal to the work related expense is exempt income and does not need to be recorded
• Go to Step 6
• No:
• The full allowance amount is exempt income and does not need to be reported
• Go to Step 6

Allowances paid regularly for ongoing work related expenses are exempt income regardless of the amount paid or expense incurred and do not need to be reported.

This is because it’s expected that at some stage the customer will use the allowance on the work related expense that it’s paid for. This includes where the customer saves up the allowance to use on the relevant work related expense. For example, a customer is paid a regular tool allowance of $50 per fortnight and saves this allowance to purchase a compressor for $600.

Go to Step 6.

For allowances where there is an assessable amount:

• Advise the customer of the assessable amount to be reported
• For non-STP income, assessable allowance amounts can be included with gross employment income
• Document the customers’ record with details of the assessment, including the type of allowance, how often it’s paid, assessable amounts and exempt amounts
• If recording the amount for the customer, see Recording and correcting employment income details for coding assistance

For allowances where the full amount is exempt income:

• Advise the customer that the full amount of the allowance does not need to be reported
• For non-STP income, remove the exempt allowance amount from the gross employment income
• Document the customer’s record with details of the assessment, including the type of allowance, how often it’s paid and exempt amounts
• If recording employment income for the customer see Recording and correcting employment income details for coding assistance

Procedure ends here.