If you are paying your employees a motor vehicle allowance as a part of their salary package this is taxed as a part of their wages. A better way would be for the employee to submit their actual expenses for reimbursement or submit a mileage claim. Both of these are non-assessable in the hands of the employee and are claimable as a tax deduction for the business, therefore removing the need for the employee to be taxed on these amounts.

Alternatively you could reimburse them for mileage - the current rate is $0.77c per kilometer for the 2014 and 2015 income tax years.

Posted 9/11/2009 – Updated 3/09/2014

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