Taxation Administration (Withholding Variation for Payment of Certain Allowances) Legislative Instrument 2025
Reference: LI 2025/21
Document type: Taxation Administration (Withholding Variation for Payment of Certain Allowances) Legislative Instrument 2025 – Compilation No. 1
Enabling act: Taxation Administration Act 1953
Date of issue: 2 September 2025
Signatory: Ben Kelly Deputy Commissioner of Taxation
Registration number: F2026C00579
Registration date: 15 July 2026

made under Section 15-15 in Schedule 1 of the Taxation Administration Act 1953

1 Name: This instrument is the Taxation Administration (Withholding Variation for Payment of Certain Allowances) Legislative Instrument 2025. | 3 Authority: This instrument is made under section 15-15 in Schedule 1 to the Act. | 4 Definitions: Note: A number of expressions used in this instrument have the same meaning as in Schedule 1 to the Act. Expressions in Schedule 1 to the Act have the same meaning as in the ITAA 1997 (see section 3AA of the Act). The following expressions are relevantly defined in section 995-1 of the ITAA 1997: (a) business kilometres; (b) car expense; (c) income tax law; (d) meal allowance expense; (e) travel allowance expense; (f) work expense. (a) business kilometres; (b) car expense; (c) income tax law; (d) meal allowance expense; (e) travel allowance expense; (f) work expense. In this instrument: Act means the Taxation Administration Act 1953. ITAA 1997 means the Income Tax Assessment Act 1997. laundry expense means a work expense to do with washing, drying or ironing clothes (but not dry cleaning). specified allowance means an allowance that is specified at section 7. | 6 Withholding amount varied to nil: (1) The amount that a payer must withhold from a withholding payment to a payee under sections 12-35, 12-40 and 12-45 of Schedule 1 to the Act is varied to nil where: (a) the payment relates to a specified allowance; and (b) the payer reasonably expects that the payee will incur deductible work expenses related to the specified allowance that in total are at least equal to the amount of the specified allowance; and (c) the amount and nature of the payment is shown separately in the accounting records of the payer. (a) the payment relates to a specified allowance; and (b) the payer reasonably expects that the payee will incur deductible work expenses related to the specified allowance that in total are at least equal to the amount of the specified allowance; and (c) the amount and nature of the payment is shown separately in the accounting records of the payer. Note: Normal withholding rates apply to the part of a payment related to a specified allowance that exceeds a limit specified in section 7 for that allowance. The normal withholding rates that apply for the financial year relevant to the payment are provided in a legislative instrument made under section 15-25 in Schedule 1 to the Act for that financial year. | 7 Specified allowances: The following allowances are specified for the purposes of section 6: (a) an allowance for car expenses based on a set rate per kilometre travelled by a car, where: (i) the allowance is calculated by multiplying the set rate per kilometre by the total number of business kilometres travelled by the car; and (ii) the set rate used in the calculation does not exceed the rate determined for the income year under subsection 28-25(4) of the ITAA 1997; and (iii) the total number of business kilometres used in the calculation in respect of which the allowance is paid during the financial year does not exceed the number of business kilometres provided for in subsection 28-25(2) of the ITAA 1997; (b) an allowance for laundry expenses where the total amount paid during the financial year for such an allowance does not exceed $150; (c) an allowance for domestic travel allowance expenses which does not exceed the amount that the Commissioner considers reasonable for the income year for the purposes of section 900-50 of the ITAA 1997; (d) an allowance for overseas travel allowance expenses which does not exceed the amount that the Commissioner considers reasonable for the income year for the purposes of section 900-55 of the ITAA 1997; (e) an allowance for overtime meal allowance expenses covered by section 900-60 of the ITAA 1997 which does not exceed the amount that Commissioner considers reasonable for the income year for the purposes of section 900-60 of the ITAA 1997; and (f) an award transport payment. (a) an allowance for car expenses based on a set rate per kilometre travelled by a car, where: (i) the allowance is calculated by multiplying the set rate per kilometre by the total number of business kilometres travelled by the car; and (ii) the set rate used in the calculation does not exceed the rate determined for the income year under subsection 28-25(4) of the ITAA 1997; and (iii) the total number of business kilometres used in the calculation in respect of which the allowance is paid during the financial year does not exceed the number of business kilometres provided for in subsection 28-25(2) of the ITAA 1997; (b) an allowance for laundry expenses where the total amount paid during the financial year for such an allowance does not exceed $150; (c) an allowance for domestic travel allowance expenses which does not exceed the amount that the Commissioner considers reasonable for the income year for the purposes of section 900-50 of the ITAA 1997; (d) an allowance for overseas travel allowance expenses which does not exceed the amount that the Commissioner considers reasonable for the income year for the purposes of section 900-55 of the ITAA 1997; (e) an allowance for overtime meal allowance expenses covered by section 900-60 of the ITAA 1997 which does not exceed the amount that Commissioner considers reasonable for the income year for the purposes of section 900-60 of the ITAA 1997; and (f) an award transport payment. (i) the allowance is calculated by multiplying the set rate per kilometre by the total number of business kilometres travelled by the car; and (ii) the set rate used in the calculation does not exceed the rate determined for the income year under subsection 28-25(4) of the ITAA 1997; and (iii) the total number of business kilometres used in the calculation in respect of which the allowance is paid during the financial year does not exceed the number of business kilometres provided for in subsection 28-25(2) of the ITAA 1997; Taxation Administration Act 1953 – Pay as you go withholding – PAYG Withholding Variation: Allowances – Legislative Instrument | 1 The whole of the instrument: Repeal the instrument Name Registration Commencement Application, saving and transitional provisions Taxation Administration (Withholding Variation for Payment of Certain Allowances) Legislative Instrument 2025 16 September 2025 ( F2025L01094 ) — Taxation Administration (Withholding Variation for Payment of Certain Allowances) Amendment Legislative Instrument 2026 30 June 2026 ( F2026L00863 ) s 1- 4: 1 July 2026 (s 2(1) item 1) sch 1 (items 1 - 5): 1 July 2026 (s 2(1) item 2 (first occurring)) sch 1 (items 6 - 7): 1 October 2026 (s 2(1) item 2 (second occurring)) — sch 1 (items 1 - 5): 1 July 2026 (s 2(1) item 2 (first occurring)) sch 1 (items 6 - 7): 1 October 2026 (s 2(1) item 2 (second occurring)) Provision affected How affected Section 2 rep LA s 48D Section 4 (note) rs F2026L00863 Section 4 ad F2026L00863 Section 5 rep LA s 48C Paragraph 6(1)(a) ad F2026L00863 Subparagraph 7(a)(i) ad F2026L00863 Paragraph 7(b) am F2026L00863 Paragraph 7(e) am F2026L00863 Paragraph 7(f) rep F2026L00863 Schedule 1 rep LA s 48C