Income tax: do payments received by an employee from an employer in respect of motor vehicle expenses incurred by an employee need to be considered when ascertaining the rebate for personal superannuation contributions to which the employee may be entitled under section 159SZ, and the repealed section 159TL, of the Income Tax Assessment Act 1936 ?

Yes, where the employee receives an allowance or his or her motor vehicle expenses are reimbursed on a cents per kilometre basis. Dependant on the level of eligible personal superannuation contributions (or rebatable contributions in the case of the repealed section 159TL), the amount of rebate allowable may be based on the amount of the employee's assessable income. Therefore it will be necessary to determine how much, if any, of the amounts received in respect of motor vehicle expenses form part of the employee's assessable income.

Motor vehicle expenses payments will be included in the assessable income of an employee if: (a) they are received as an allowance; or (b) they are received as a cents per kilometre reimbursement. Other forms of reimbursement are exempt income and therefore should not be included in the employee's assessable income when calculating a superannuation rebate.

A payment is an allowance when a predetermined amount is paid by the employer to cover an employee's estimated expense. It is paid regardless of whether the employee incurs the expected expense.

A payment is a reimbursement when an employee is compensated exactly for an expense already incurred although not necessarily disbursed.