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Payroll Q&A ‘ Treatment of cents per KM car allowance in excess of 5000kms

An organsation pays cents per KM car allowances in relation to business travel – what is required re PAYG Withholding and Payment Summary reporting?

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Question

Our organisation pays cents per KM car allowances in relation to business travel – we pay at a cents per KM rate above the ATO approved rate of 66 cents and the employees claim more than 5000kms per annum – what is required re PAYG Withholding and Payment Summary reporting?

Answer

The ATO position is set out at https://www.ato.gov.au/Business/PAYG-withholding/Payments-you-need-to-withhold-from/Payments-to-employees/Allowances-and-reimbursements/Withholding-for-allowances/

The position for all situations is shown below.

Allowance type Are you required to withhold? Include on payment summary? If so, how? Does super guarantee apply?
Payments made by applying the approved (or a lower) rate to the number of kilometres travelled up to 5,000 business kilometres No Yes (show total allowance separately in allowance box with an explanation) No
Payments made by applying the approved (or a lower) rate to the number of kilometres travelled in excess of 5,000 business kilometres Yes (from payments for the excess over 5,000 kilometres) Yes (show total allowance separately in allowance box with an explanation) No
Payments made at a rate above the approved rate for distances travelled up to 5,000 business kilometres Yes (from the amount which relates to the excess over the approved rate) Yes (show total allowance separately in allowance box with an explanation) No

 

In the situation in question the outcome is:

Allowance re 0-5,000KMs:

Withholding required on the excess of the cents per KM rate paid less 66 cents per KM.

Allowance re +5,000KMs:

Withholding required on full payment for KM’s in excess of 5,000.

In both cases the full allowance should be reported on the Payment Summary and Superannuation Guarantee is not applicable.

Disclaimer: Information provided in this article, while correct at time of publishing, is subject to change.

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