Hoping somebody can help me with this...
If you are contracting your services to a company, and your payment includes a sustenance allowance (for meals, taxis and stuff), do you pay tax on that extra allowance?
So far I have had a range of contradicting responses from the company, the taxman and an accountant.
So I thought I'd ask you lot! There has to be a few people on this forum that know about this stuff.
Cheers in advance
Chris
Things may be different here in OZ, but I believe you would declare/pay tax on all monies received.
It is then up to you to keep all receipts to claim deductions for your actual costs/outgoings.
It can depend on how the allowance is paid, but as you are a contractor, you would still have to declare all monies received.
If you were on salary, they can actually pay you some types of allowances you don't pay tax on. E.g. Meal allowance, as long as it does not exceed that allowed by our ATO in their work sheets. Something like: breakfast$25, lunch$30, dinner $47 for a salary below $100k.....I pulled those figures out of my arse, but you get the picture
Rick
Hi Chris,
In my industry- Film and TV- we have "per diems" or dailies which cover accom, meals etc.
Dailies are treated as "other income", which we charge to the client/company and then match our actual expenses against the charge. We are then taxed on the margin between what we charge and what we spend...it's nothing to write home about and definately isn't going to make us millionaires!
Does that make sense??
It depends on a number of things that will be particular to your circumstances. I would tend to trust the accountant if he has all the facts...it is his job....
Critically - are the additional payments related to travel away from "home". If so they could fall under a tax free allowance for this. tables are published by the ATO.
If they are a part of a normal working arrangement, ie lunch and travel to and from your normal workplace, then they will attract tax. How they attract tax would be defined by how you are contracting....
Cheers for your replies.
I'll check out the ATO table. Was told initially by employer that this allowance was exempt, but wondering if they might be wrong.
I was a little sceptical about the accountant...... he is the only person who would make a direct monetary gain, and I don't really trust accountants (or mechanics, IT guys, real estate agents, banks etc etc!)
Anyway, some useful ideas from you lot, thanks.
As a contractor I would have thought it would be pretty simple, money in minus expenses = income. The way it's written into your contract is of no concern to the ATO or the NZTO.
If you don't trust your accountant get a new one, and/or get a salary job and do your own tax return.
In Australia here, Allowances and other employment income.
You must declare other types of employment income, including:allowances (such as car, travel, clothing and laundry allowances)tips, gratuities and payments for your services consultation fees.
But if you received a travel allowance or overtime meal allowance paid under an industrial law, award or agreement, you don't have to include it on your tax return if it meets all of the following conditions,
It was not shown on your payment summary.
It does not exceed the Commissioner's reasonable allowance amount
You spent the whole amount on deductible expenses.
Maybe you could ask Craig Thompson.
Apparently he received a few payments when he was in the HSU which were on top of his normal wages.
He should know all the right procedures by now, even if he didn't then.
