Is Travel Allowance taxable

 Author: PayrollDeanne(Taxicorn)Taxicorn

24 July 2025

Hiya @Sillyfish 👋

Terminology is king 👑 here, because you have said you receive a "payment summary", so does that mean you don't have an ATO Online Income Statement that is from your employer reporting each pay to the ATO via Single Touch Payroll?

Either way, "travel allowances" have always been treated the same way with respect to ATO requirements:

• Employer determines the amount to pay you for the domestic accommodation (commercial establishment only), meals (breakfast, lunch, dinner separate amounts) and incidentals. That's the payment to you addressed.
• Next, the employer must assess what they have paid you against the ATO reasonable rates that are defined annually that are based on: eligibility, purpose of travel, sleeping away from home, annual salary (excluding allowances) amount, destination and types of meals. Whew 🤓
• When they compare what they paid you for each of the expense items and compare it with the complex ATO reasonable rates, if the amount they paid you exceeds the ATO reasonable rate for all of those conditions, then the employer must withhold tax ONLY on the amounts that exceed the ATO reasonable rate and report the entire amount separately (both PS and STP) as itemised allowances. You must then claim a deduction on your tax return.
• However, if the comparison shows that the amount they've paid you for all of the conditions doesn't exceed the ATO reasonable rate, then the entire amount is not reported at all and no tax is withheld. You can claim a deduction only if the amount you actually spent exceeds the allowance you received.

See how easy it is? 😵‍💫

Deanne

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