Assessment of Allowances

Last amended: 22 June 2006

Allowances are excluded from the assessment

Allowances paid to the employee to meet genuine work-related expenses are excluded from the income assessment, as these amounts are intended to meet incurred work costs and are therefore not available for the use or benefit of the person. Where there is satisfactory evidence that earnings include amounts for allowances that were fully expended on work-related expenses, these amounts should be excluded from the earnings assessment.    

The allowances must be directly related to the earnings being assessed, in order to be excluded from the income test. Expenses cannot be transferred to unrelated areas of employment.

Excess allowance amounts are still assessed as income

Where allowances are paid in excess of the actual work-related expenses they are intended to cover, there is a residual amount that becomes available for the person's own use or benefit. As a result, any residual allowance amount should continue to be assessed as income.

Equally, where there is satisfactory evidence that designated allowance amounts were insufficient to meet the genuine work-related expenses they were intended to cover, the excess expenses met by the employee represent amounts not available for their own use or benefit, and so may be excluded from the earnings amount.

Examples of earnings calculations including allowances

• Gross earnings of $500 per fortnight include an allowance component of $50 which is fully expended on work-related expenses. Assessed income is therefore $450 per fortnight.
• Gross earnings of $500 per fortnight include an allowance component of $50, but only $20 of the allowance amount is expended on genuine work-related expenses. The residual allowance amount of $30 is therefore assessable, resulting in assessed income of $480 per fortnight.
• Gross earnings of $500 per fortnight include an allowance component of $50, but there is satisfactory evidence that the person expends $80 on genuine work-related expenses. The additional payment of expenses, beyond the rate of allowance, can be recognised resulting in assessable income of $420 per fortnight.