Hiya @trewintell 👋
One of the things that is very difficult for those who do payroll, when it comes to ATO requirements, is to put your Fair Work hat on to classify a worker, determine their entitlements and pay; then take it off and put on your ATO hat to determine how to classify that payment as income for tax, super and reporting purposes in order to actually pay the money to the employee. The two hats are similar, but not at all the same!
The first ATO-hat step is to determine the classification of income. To do so, you determine the purpose and circumstances of the payment. If you are paying an allowance for when the employee sleeps away from home, it is a travel allowance. The ATO has three types of travel allowance: accommodation, meals and incidentals.
You say that the employer pays the "supplier", but that can only refer to accommodation and meals, as incidentals are to cover the costs to the employee that are incidental to travel. For example, the employee may have opened their travel case and their toothpaste has leaked everywhere, so they need to buy some more. Incidental expenses are also daily, not apportioned for part-day travel. Might your allowance therefore be the incidentals component?
If so, compare the amount you pay with the ATO reasonable amount. If it exceeds it, you must tax the portion that exceeds the ATO reasonable amount, assess it for super guarantee, and report the entire amount (not just the amount that exceeds the ATO reasonable amount) in STP2 as Allowance Type RD Travel Allowance.
Now for the ordinary time meal break. Yes, this is not an Overtime Meal Allowance, but an ordinary shift meal allowance. It is an expense allowance paid, I assume, to contribute to the cost of a meal. As such, it is not deductible, so is taxed as per salary and wages, assessed for super guarantee and is reportable in STP2 as Allowance Type Other > ND Non-deductible.
It takes a bit of getting used to. Just because an industrial instrument (Award, Agreement, contract or policy) may call the allowance one thing, it doesn't mean that's what the ATO classification of income is. Hence my hat analogy ðŸ¤
The excellent ATO STP2 Employer Guidance on Allowances is very helpful! 😉
Deanne
Hi @py_deanne
Thank you for your reply, please refer to the following for more information.
The first allowance isn't to cover any incidentals as mentioned above, it is for enticement/encouragement for the employee to want to stay away from home, extra money for the employee, paid for any night they do not sleep in their own bed, it is not an award requirement to pay this money, it is an unconditional allowance, not paid to cover any expense, they can spend as they please.
The second, like mentioned above also isn't to cover the cost of any meals, they are paid for the time (30 minutes) they take away from work for their meal break, even though they don't actually work the time, so it isn't ordinary or overtime hours worked. It is an unconditional allowance, they can spend as they please, it is not paid to cover any expense or meals, and it is not an award requirement to pay them for this time, as per the award it is an unpaid meal break, however the employer chooses to pay them for it.
Hope this clarifies, look forward to your further reply.
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