Hi,
We are paying $ 3,000 as a one-time relocation cost to a new employee joining the team. This payment is not part of their contract. They are not required to produce any receipts to receive this payment. How do we treat this payment? Do we process it through payroll, and is it tax deductible?
thanks
If the employee isn't providing receipts, the payment is regarded as an allowance and it should be processed via payroll and PAYG applied.
If you instead reimburse qualifying expenses such as removal costs, transport and certain other things, these are exempt from Fringe Benefits Tax and not subject to PAYG. See more under section 20.4 here Fringe benefits tax - a guide for employers | Legal database
Either way, the employer is entitled to a tax deduction for the payment as a cost of remuneration.
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