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Max-Tjan(Initiate)Initiate
9 June 2021

Hi,

The company that I am working for is planning to provide travel allowance to couple of salesperson through wages.

Just purely for the company side, is there any extra tax obligation that the company needs to know when providing such allowance?

Or it's just the same as normal?

When I say normal, meaning: provide the agreed amount of allowance per week that will be included in the wages and withhold the tax accordingly as well as catagorised this pay properly in the STP payroll reporting system?

Thanks in advance for the advise

Cheers

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1,319 views
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Most helpful replyATO Certified Response

BlakeATO(Community Support)Community Support
ATO Certified Response10 June 2021

Hi @Max-Tjan,

It will be the same as most other allowances.

How the allowance is paid depends on if the expenses are allowable deductions to you, the employee. PAYG must be withheld regardless (unless the exception to this rule is met).

If the travel expenses the allowance compensates are deductible to you, the payment gets reported as an allowance. You then claim a deduction on your return with substantiation.

If the travel expenses the allowance compensates are not deductible to you, the payment reported as part of your gross salary and wages.

Allowances expected to be used in full are not superable. However, if you aren't expected to use the full amount, or have discretion on how you use it, it is an allowance by way of unconditional extra payment. This makes it superable

If it is a reimbursement (not an allowance) of costs, it may be a fringe benefit and be liable for FBT.

You can read about PAYG for travel allowances and payments that are ordinary time earnings (and therefore superable) on our website.

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Most helpful replyATO Certified Response

BlakeATO(Community Support)Community Support
ATO Certified Response10 June 2021

Hi @Max-Tjan,

It will be the same as most other allowances.

How the allowance is paid depends on if the expenses are allowable deductions to you, the employee. PAYG must be withheld regardless (unless the exception to this rule is met).

If the travel expenses the allowance compensates are deductible to you, the payment gets reported as an allowance. You then claim a deduction on your return with substantiation.

If the travel expenses the allowance compensates are not deductible to you, the payment reported as part of your gross salary and wages.

Allowances expected to be used in full are not superable. However, if you aren't expected to use the full amount, or have discretion on how you use it, it is an allowance by way of unconditional extra payment. This makes it superable

If it is a reimbursement (not an allowance) of costs, it may be a fringe benefit and be liable for FBT.

You can read about PAYG for travel allowances and payments that are ordinary time earnings (and therefore superable) on our website.

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