(i am a fencer) every week we submit our km travelled to payroll. every week we are paid an ato rate (.78cents) of reimbursment for km traveled depending on the distance travelled. every week the amount is different. if i dont drive i dont get the reimbursment. if i drive 50km that week id only get $39. if i drove 250km id get $195. is this a reimbursment or an allowance? my employer has said its an allowance even though the workforce presumed it was a reimbursement. the award im under (manufacturing award) says there is no travel allowance for my particular industry. and everything ive googled says that km traveled that have been paid at the ato rate are non taxable income and an allowance is the same every week regardless of if you have traveled that distance or not. as my employer submits it as an allowance i find myself having to pay tax on it at the end of the financial year which is thousands.
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is this a reimbursment or an allowance?
Allowance
and everything ive googled says that km traveled that have been paid at the ato rate are non taxable income
That means just that employer does not have to deduct tax from a km allownce if there is a reasonable expectation that the employee will be able to claim a deduction.
i find myself having to pay tax on it at the end of the financial year which is thousands.
Only if you do not claim for your car usage - either by log book method or cents per km.
All replies
is this a reimbursment or an allowance?
Allowance
and everything ive googled says that km traveled that have been paid at the ato rate are non taxable income
That means just that employer does not have to deduct tax from a km allownce if there is a reasonable expectation that the employee will be able to claim a deduction.
i find myself having to pay tax on it at the end of the financial year which is thousands.
Only if you do not claim for your car usage - either by log book method or cents per km.
so why does the ato say an allowance is by definition:
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, underground allowance.
And the reimbursement definition is:
If your employer pays you back for an expense, even if you haven't paid for it yet, this is a reimbursement. You cannot claim a deduction for an expense that has been reimbursed. See more: • Taxation Ruling TR 97/7 Income tax: section 8-1 - meaning of 'incurred' –
my confusion here is that its not an estimate, we are paid for exactly the amount traveled, and its paid retrospectively at the ato rate, as in, paid back to us the pay of the next week. im not provided money for the amount of fuel im expected to use next week, so its not an estimate of a cost that may be incurred, its me fronting the cash upfront for my employers business so he can operate. can you maybe dumb it down for me what im getting wrong here about the difference between the 2?
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