Other Allowances are expense allowances only. What is important to remember is you do not separately itemise your Other Allowances. The ATO's preferred method for other allowances is to report a category code using a set of ATO predetermined category codes.

When it comes time for employees to lodge their tax returns, this will assist the ATO in getting a clear picture of the allowances paid to the employee. This process will ensure your employees receive the correct category code and are adhering to the ATO promoted platform.

Where the Other Allowance category in the following article does not specifically address an expense allowance, then you need to classify it as Allowance - Other. For example, car allowances other than cents per kilometre, or laundry allowances for conventional clothing, would fall into this classification. When creating a pay category for Allowance - Other, you must enter an allowance description. When lodging STP events, you will need to use the allowance description instead of the pay category name.

Allowance Descriptions

ATO strongly suggests the following descriptions for the Allowance Description:

G1 General

You should use this allowance description for any deductible expenses, such as

• Laundry allowance for laundering items that are not approved uniforms that are still deductible expenses.
• Domestic or overseas travel allowances and overseas accommodation expenses that are deductible expenses; and
• Other deductible expenses, not otherwise separately itemised.

H1 Home Office

You would use this allowance description for any working from home allowances from the purpose of purchasing equipment or connecting to communication services, such as home office equipment and phone/internet. This type of allowance must not include specific allowances paid for the purchase and maintenance of specific tools and equipment reported as a tool allowance.

ND Non-deductible

You would use this allowance description for any non-deductible expense allowances where the PAYG is as per salary and wages. For superannuation guarantee purposes, you assessed these allowances on their relevance to the ordinary span of hours or outside hours. This category includes those allowances from the separately itemised allowances that have failed to meet the conditions of those allowances and are non-deductible, such as for:

• Cents per km payments for private travel, such as travel between home and work.
• Allowance payments for the cost of transport for private purposes.
• Laundry allowance for the cost of laundering uniforms for private purposes.
• Allowances paid for travel that is for private purposes.
• Part-day travel allowances.
• Allowances paid in relation to equipment used for private purposes; and
• Any other allowance that is for a private purpose or other non-deductible reason.

T1 Transport/Fares

You would use this allowance description for any deductible expense, such as

• Award transport payments where you cannot source the historical award from the current award transport payment or is not traceable to a historical award in force on 29 October 1986; and

• Fares allowances paid to compensate the transport costs for business that are not sourced from an award, such as an individual contract for services or business policy.

U1 Uniform

This allowance description represents allowances paid to employees for the employee to purchase approved uniforms. You must not use description for any reimbursements of uniforms, but must represent allowances paid to employees for the employee to purchase the uniforms. The employee may claim their actual expenses on their annual income tax return, with relevant substantiation.

V1 Private Vehicle

You would use this allowance description for any deductible expense, such as

• Cents per kilometre for mileage allowances paid for other vehicles such as motorcycles; and

• Car allowances paid as a fixed amount, regardless of the kilometres travelled or without reference to award transport payments.