I have a new young employee that I wish to add $50 to his wage each week to cover his fuel costs. He will not be claiming these fuel costs as an expense, so does he need to declare it in his income? If not declaring it in income, my guess is I would set it up as a net (no tax) allowance and not subject to super component either. Does this mess things up with STP, I don't want to get to the end of the financial year and discover I've made a headache for either him or me!


  • Acctd4
    Acctd4 Accredited Partner Posts: 3,188 Reckon Accounts Hosted Expert Reckon Accounts Hosted Expert

    Yes, this scenario means the fuel payment would be classed as "Ordinary Time Earnings" (OTE) (because it's paid regardless of the amount actually expended & is not able to be claimed as a tax deduction by the employee)

    It is taxable income to the employee & therefore it needs to be setup as an Allowance Payroll Item with PAYG Tax & Super both applicable.

    Shaz Hughes Dip(Fin) ACQ NSW, MICB

    *** Reckon Accredited Partner(AP) Bookkeeper - specialising EXCLUSIVELY in Reckon Accounts / Hosted ! ***

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    COMPLETE Member Posts: 5

    Thank you! Much much appreciated.