July 16, 2019   |   Tips

Reporting motor vehicle allowances to the ATO

How a motor vehicle allowance is to be reported to the ATO, and how it is to be processed, is based on what the vehicle is used for.

Depending on what ATO category the payment falls under will determine if the motor vehicle allowance is considered to be ordinary time earnings (OTE) and if super is applicable on the payment.

For STP reporting purposes, motor vehicle allowances are categorised into two different fields, dependent on the purpose of the allowance.

Motor vehicle allowances and PAYG

In relation to motor vehicle allowances, the ATO states that you are required to withhold from the allowances listed in the following table.

Motor vehicle allowances

Source: ATO website

On the subject of the motor vehicle allowances, we are often asked, “our accountant has advised that we are not to withhold PAYG – is this correct?”

As shown in the above table and on the ATO website, this is not correct. An employer is required to withhold PAYG from motor vehicle allowance payments (unless the employer has received a withholding variation directly from the ATO to alter the amount of PAYG withheld).