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gunny(Newbie)Newbie
8 Sept 2025

Hi all,


My employer provides us with a monthly stipend to cover 1. Medical Insurance (they pay a set amount per month, and then we can choose our own policy at whatever coverage/price we decide), and 2. a WFH stipend (again, they pay a set amount each month regardless of actual expenses incurred).


They recently changed the structure of this allowance, and my colleagues and I are wondering if the changes are correct.

Are the stipends considered a reimbursement or an allowance? And should the employee be paying tax on it (as if it was the same as salary/wages), or rather should the employer be paying FBT on it and the employee receiving the stipend amount in full?

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1 replies
298 views
1 replies

All replies

ATO Certified Response
NikkiATO(Community Moderator)Community Moderator
ATO Certified Response10 Sept 2025

Hi @gunny,


The stipends for medical insurance and WFH expenses are likely allowances, not reimbursements. Allowances are taxable and count as part of your salary, so you’ll need to include them in your tax return.


For the medical insurance stipend, if your employer gives you a set amount to use as you choose, it’s treated as taxable income.


For the WFH stipend, if it’s a fixed amount and not tied to actual expenses, it’s also taxable. However, you might be able to claim deductions for your actual WFH expenses if you keep proper records.


If your employer paid these directly to providers or via salary packaging, they could instead attract fringe benefits tax (FBT). But since you’re receiving set stipends, they’re treated as part of your income.

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Are stipends considered allowances or reimbursements? And does FBT apply? | ATO Community