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H-TS's avatar
H-TS
Trusted User
12 days ago

How do you handle a cents per KM car allowance over ATO rate

Hi,

 

We have some new employees who are on awards I haven't encountered before, that specify a per-km allowance higher than the tax-free rate assigned by the ATO.

 

Do I need to have two separate pay categories for this? One for the tax free portion (up to 88c per km for 2024-25), and a second category for the extra 10c per km that the award requires and is taxable? 

That's going to be messy on payslips with the allowance showing twice at different rates for the same number of kilometres. 

 

Is there a better way?

 

I've seen the instructions for setting up an allowance with a flat rate of tax but that's not quite the same thing.

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  • Earl_HD's avatar
    Earl_HD
    12 days ago

    Hi H-TS

    Given the situation, the only option is to set up two separate pay categories: one for the tax-free portion (up to 88c per km) and another for the taxable portion (the additional 10c per km). This will ensure correct processing according to tax regulations.

    For further guidance and to ensure compliance, it's advisable to consult with an accountant. They can provide expert advice and help streamline the process.

    Regards,
    Earl

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  • Earl_HD's avatar
    Earl_HD
    MYOB Moderator
    12 days ago

    Hi H-TS

    Given the situation, the only option is to set up two separate pay categories: one for the tax-free portion (up to 88c per km) and another for the taxable portion (the additional 10c per km). This will ensure correct processing according to tax regulations.

    For further guidance and to ensure compliance, it's advisable to consult with an accountant. They can provide expert advice and help streamline the process.

    Regards,
    Earl