Private ruling: Mileage allowance
Published: March 2014
Ruling period: Year ended 30 June 2014
Date scheme commenced: 1 July 2013

Ruling: Q1: Is your cents per kilometre payment an assessable allowance that is included on your tax return? | A1: Yes.

Relevant facts and circumstances: You receive a mileage allowance calculated on a per kilometre basis. The allowance is shown separately on your PAYG payment summary and no tax is withheld.

Relevant legislative provisions: Income Tax Assessment Act 1997 Subsection 6-5(2) | Income Tax Assessment Act 1997 Section 15-70

Reasons for decision: Summary: Subsection 6-5(2) of the Income Tax Assessment Act 1997 (ITAA 1997) provides that the assessable income of a resident taxpayer includes ordinary income derived directly or indirectly from all sources during the income year. Allowances are ordinary income for the purposes of subsection 6-5(2) of the ITAA 1997. 'Ordinary income' is generally considered to include: • amounts received in return for personal services, whether received in the capacity of an employee or otherwise; • amounts received periodically or regularly and which the recipient relies on for the maintenance of themselves and/or their dependants ( Federal Commissioner of Taxation v. Dixon (1952) 86 CLR 540). Amounts which are paid by an employer to an employee as a reimbursement for car expenses calculated on a per km basis is income in the hands of the employee and assessable to the employee under section 15-70 of the ITAA 1997. In your case, your employer pays you a mileage allowance. The payment is calculated on a per kilometre basis. Therefore this payment falls within the definition of assessable income and the amount will be included as part of your income in your tax return.