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Car Allowance

Payment of a car allowance gives rise to a number of tax questions.

An allowance paid to an employee is taxable income, and tax is required to be withheld from the payments according to the prescribed tax scales, unless it excluded.

The exceptions depend on exactly what the allowance is for and how it is calculated.

For the car expense substantiation rules – see Work Related Car Expenses

For working out tax claims and reimbursements on a Cents-per-kilometre basis – see Cents Per Kilometre

For information about the PAYG (withholding) requirements – see PAYG Withholding Variation: Allowances

For information about the potential FBT coverage of car expense payments – see Car Fringe Benefits

This page was last modified on 2021-06-30