Premier & Cabinet

Type:
Department of Premier and Cabinet Circular
Identifier:
C1998-03
Status:
Archived

C1998-03 Taxation of Allowances

Detailed Outline

The purpose of this Circular is to advise you of further developments on the issue of taxation of overtime meal and travelling allowances, including an agreement to adopt some Australian Taxation Office (ATO) 'reasonable amounts' as an interim measure.

Circular No 98-45 advised that the ATO was not prepared to grant an extension of time to comply with Taxation Rulings requiring PAYE deductions on overtime meal and travelling allowances beyond 30 September 1998. The Taxation Rulings (Currently TR 98/10) require that where the relevant NSW public sector allowance rate is greater than the ATO 'reasonable amount', then PAYE deductions are required on the excess above the reasonable amount and the whole amount is to be shown on employees' group certificates.

The Taxation Rulings provide that when employees submit their taxation returns they have the choice of claiming a deduction from their assessable income for overtime meal and/or travel allowance received as a work expense. If employees choose to claim up to the reasonable limit then no substantiation is required. However, if the employee chooses to claim above the reasonable limit (for example, the full amount of the allowance) then substantiation is required for the full amount. Further, if the employee chooses to claim above the reasonable amount for a particular overnight stay then all other travelling allowances received during the financial year will require substantiation regardless of whether or not only the reasonable amount was claimed on other occasions.

Circular No 98/45 also advised that the Premier's Department is pursuing an appeal against the ATO's decision to refuse the NSW public sector an exemption from the Taxation Rulings. It is unlikely, however, that this appeal process will be concluded in the short term.

Having regard to the uncertain time frame of the appeal process, the substantiation requirements on staff and the significant administrative burden on Departments and agencies to implement the taxation requirements, agreement has been reached with the Public Service

Association (PSA) that, as an interim measure, ATO reasonable amounts be adopted where NSW public sector rates exceed the ATO amounts. The practical effect will be that notwithstanding rates in the Crown Employees (Public Service Conditions of Employment 1997) Award, the 'Dinner' rate for overtime meal allowance will be $15.00 in lieu of the current award allowance of $18.40. Other overtime meal allowances are unaffected. The daily rate for travel allowances for some locations will be less than the award rate. Details of the ATO reasonable amounts for travel allowances are available from Taxation Ruling TR 98/10 and are attached for information.

Please note that in respect of travel allowances different ATO rates apply to different salary levels and that the rates are location specific. The appropriate amount for each location will need to be established by reference to Taxation Ruling 98/10 and compared to the relevant award rate (that is, currently Capital Cities and Canberra $171.85 per day and Elsewhere $122.40 per day). By way of examples, the following amounts would apply for an officer Grade 11 or below:

Location Amount

Darwin (Capital city) $149.20

Wagga Wagga (Tier 2 country centre) $116.95

Dubbo (Other country centre) $107.95

Please note that the award rate will apply to ATO High cost country centres as the ATO reasonable amount for each of these locations is in excess of the award rate.

It is essential that staff be made aware of these arrangements before incurring costs for overtime meals and before proceeding on work related travel.

It is emphasised that this is an interim measure that has been adopted in light of the present circumstances. This matter will be monitored closely and reviewed throughout the appeal process. I will keep you informed of developments.

Any enquiries may be directed to Doug Cowell on telephone number 9228 3575.

C. Gellatly

Director-General

Overview

Compliance

Not Mandatory

AR Details

Date Issued
Jun 13, 2014
Review Date
Jun 13, 2024
Replaces
Replaced By

Contacts

Contact
Contact us
Phone
02 9228 5555
Publishing Entity
Department of Premier and Cabinet
Issuing Entity
Department of Premier and Cabinet