Payroll Q&A – Mayor and councillor allowances


Councillors receive an allowance which is determined by each council within limits set by the Victorian Government. Mayors and councillor allowances are also subject to the addition of 9.5% superannuation. Is the allowance taxable to the mayor and councillors?


Any remuneration, sitting fee or allowance paid to a local government elected member is ordinary income within the terms of s. 6-5 of the ITAA 1997.

A payment is an allowance when a member of council is paid a definite, predetermined amount to cover an estimated expense. It is an amount contributed towards an expected expense and is made regardless of whether the member incurs the expected expense. The spending of the allowance is at the complete discretion of the member.

The above applies regardless of whether the council has passed a unanimous resolution that its members remuneration be subject to PAYG withholding and has notified the Commissioner accordingly (s. 446-5 of Sch. 1 of the TAA). All remuneration or rewards for personal services, whether received in the capacity of an employee or otherwise, in connection with personal services, is income according to ordinary concepts.

Editor’s note: For further information on the PAYG and superannuation implications of these kinds of allowances, read our Payroll Q&A – Telecommunications allowance paid to councilors.


This article provides a general summary of the subject covered and cannot be relied upon in relation to any specific instance. It is not intended to be, nor should it be relied upon as, a substitute for professional advice. TaxEd Pty Ltd and any person connected with its production disclaim any liability in connection with any use.