Payroll tax on leave, allowances and benefits

Payroll tax can apply to payments made to employees in the form of leave, allowances and benefits.

The tables below list typical payments and if they are taxable.

Leave

TypeLiability

Accident pay

Taxable if you pay:

  • wages for the day of injury
  • an employee is away from work after an accident
  • compensation for a work-related injury where the claim is not approved under the Workers' Compensation and Rehabilitation Act 2003

Australian Government Paid Parental Leave scheme

Not taxable

Holiday pay

Taxable

Jury service

Taxable

Leave loading

Taxable

Long service leave

Taxable

Make up pay

Taxable

Military leave

Not taxable

Parental, adoption and surrogacy leave

Not taxable for wages paid to a maximum of 14 weeks, or the equivalent amount if taken over a longer period

Sick leave

Taxable

Volunteer worker leave

Not taxable if the employee is:

  • a volunteer member of a rural fire brigade
  • a volunteer member of the State Emergency Service
  • an honorary ambulance officer

Workers' compensation payment

Not taxable if it is a:

  • compulsory payment insuring against accidental, work-related injuries
  • WorkCover Queensland compensation payment

Allowances

TypeLiability

Accommodation

Taxable for the part of the allowance over the exempt rate as long as it is used for overnight accommodation - this can also include meals and incidentals

Clothing

Taxable

Living away from home

Taxable in accordance with the Fringe Benefits Tax Assessment Act 1986 (Cwlth)

Meals

Taxable

Motor vehicle

Taxable over the exempt component when you calculate the number of kilometres an employee travels for business purposes in their own car

Overtime

Taxable

Relocation

Taxable

Tool

Taxable

Benefits

TypeLiability

Car parking fringe benefits

Not taxable

Cars

Taxable

Salary sacrifice arrangements

Taxable

If in exchange for fringe benefits, the fringe benefits' grossed-up value is taxable. Otherwise, the entire sacrificed amount is taxable

Entertainment fringe benefits

Not taxable if the organisation is a tax-exempt body

Exempt benefits

Not taxable as of 1 July 2011

Fringe benefits

Taxable (except for car parking and entertainment fringe benefits)

Valued using the Type 2 gross-up factor

Gifts

Taxable unless not related to employment services

Low-interest for interest-free loans

Taxable

Non-cash benefits

Taxable if they form or are defined as wages

Reimbursements

Not taxable unless a fringe benefit

An expense payment fringe benefit may arise where an employer:

  • reimburses an employee for expenses incurred by the employee
  • pays a third party for the expenses incurred by the employee

These expenses may be business or private expenses, or both