The Guides to Social Policy Law is a collection of publications designed to assist decision makers administering social policy law. The information contained in this publication is intended only as a guide to relevant legislation/policy. The information is accurate as at the date listed at the bottom of the page, but may be subject to change. To discuss individual circumstances please contact Services Australia.

4.3.2.10 Income received to cover specific expenses

Payment to reimburse for expenses

Some amounts are not considered to be income if they are paid to a person to reimburse them for the cost of specific expenses (for example, work related) they have incurred. In these situations, the person does not gain additional benefit from the payment.

Example: A payment is not considered income when an employee pays accommodation costs for a work trip up front and their employer reimburses the employee after for the expenses incurred.

Example: Reimbursements paid to people such as mayors, council members, Justices of the Peace and volunteers for expenses they have incurred in undertaking their role.

If a person receives more than the amount of the expenses they actually incurred, any extra IS considered to be income.

Act reference: SSAct section 8(1)(a)-'income'

Allowances paid by employers

Allowances received from an employer by an employee for work related expenses associated with their employment are NOT considered to be income. Where an employer pays more than the amount of the expenses actually incurred by an employee, the extra IS considered to be income.

Examples: Allowances for travelling, fuel, clothing or meals.

Allowances which are paid on a consistent basis throughout the year for work related expenses, such as tools allowance and laundry allowance, are not considered income as these allowances are paid in an aggregated way over time to cover ongoing work related expenses.

Allowances that are not paid for expenses associated with employment ARE assessed as income.

Examples: Danger, site or location allowances, on-call or restriction allowances, first aid and fire warden allowances.

Policy reference: SS Guide 4.3.3.40 Employment income for allowees, 4.7.1.20 Assessment of income for sole traders & partnerships, 4.7.1.30 Assessment of business deductions & losses for sole traders & partnerships

Income test treatment of ministers of religion

For the income test treatment of ministers of religion see 4.3.3.55.

Reimbursements to volunteer workers

Where a volunteer worker receives reimbursement from an agency specifically for out-of-pocket expenses incurred the payment is NOT assessed as income. Where a volunteer receives more than the amount of the expenses actually incurred, the extra IS considered to be income.

Example: Reimbursements to volunteer workers such as telephone calls, travel expenses or purchases.

Payments for jury attendance or court appearances

A payment (including for out-of-pocket expenses) to a person for serving, or being summoned to serve, on a jury is NOT income.

A payment to a person for expenses as a witness, other than an expert witness, before a court, commission or tribunal is NOT income.

Exception: Payments to expert witnesses for special skills or knowledge, ARE treated as income if they are:

  • a wage or fee, or
  • payments to cover wages or salary lost during the court sitting.

Act reference: SSAct section 8(8)(zg) a payment received by the person for serving …, section 8(8)(zh) a payment received by the person for expenses as a witness …

Policy reference: SS Guide 4.3.3 Income from employment

Payments for bereavement or funeral expenses from overseas countries

Many overseas countries provide one-off payments on the death of a contributor or pensioner to assist with funeral and other costs associated with the bereavement. An amount paid to a person in respect of the cost of funeral and other expenses that were associated with the bereavement is not considered income provided the delegate is satisfied that the expenses were incurred by the person.

Act reference: SSAct section 8(1)(a)-'income'

Taxation refund

An ATO tax refund is not considered income as the refund is a return of a person's money paid to the ATO and previously assessed as part of the person's gross income.

This is similar to the treatment of GST refunds (4.7.5.30) that are reimbursements of monies paid to the ATO and previously assessed as part of business income. Also, the refund is similar to a reimbursement of costs, a return of money assessed before the person paid the costs or expenses.

Policy reference: SS Guide 4.7.5.30 Business Requirements & Fringe Benefits

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