Teachers could face tax liability over travel

Greg Butler
Research/Industrial Officer

New flat rate will affect some members

Members who have been paid allowances for travel by medium or large size motor vehicles since July 1, 2015 are encouraged to seek independent financial and taxation advice to determine how to manage a potential tax liability at the end of the current financial year.

Changes to taxation laws under the 2015-16 Federal Budget were given royal assent on November 30, 2015, abolishing the three engine size rates that the Australian Taxation Office has allowed employers to calculate private motor vehicle allowances since the 1980s. From July 1, 2015 a flat rate of 66 cents per kilometre for all vehicles will be applied by the tax office.

The new flat rate is one cent higher than the rate that was allowed for small size engines (1600cc or less) but is 10 cents less than was allowed for medium size engines (1601cc-2600cc) and 11 cents less than was allowed for large size engines (2601cc and above) in the previous financial year.

For members, the new legislation means that authorised use of a private motor vehicle should be paid:

  • at the “Official Business Rate” of 66 cents per kilometre for all vehicles if travel is in performance of normal duties on a “regular” basis to a maximum of 8,000km; or
  • at the “Casual Rate” of 26.4 cents per kilometre for all vehicles if official business travel is “intermittent” or if the 8,000km limit on the official business rate is exceeded in the year.

Prior to the new legislation, members’ claims for travel since July 1, 2015 were still being processed for small, medium and large car sizes because the federal budget measures had not yet become law.

After those changes received royal assent, Federation Officers met with the Department of Education to raise concerns over reductions in travel allowances for teachers in schools, TAFE and OCAA and how the new legislation would be implemented partway through the current financial year.

Accordingly the Department released a memorandum (IRC 15/13) on December 17, 2015 confirming that, for members in schools, TAFE and OCAA:

  • the new flat rate will apply immediately for all unprocessed claims for travel since July 1, 2015
  • repayment of amounts over 66 cents per kilometre already processed for travel since July 1, 2015 will not be sought
  • a top-up to 66 cents per kilometre will be paid for claims that have already been processed for travel since July 1, 2015 by small motor vehicles (1600cc or less), which were paid at the old rate of 65 cents a kilometre.

Federation does not give financial and taxation advice.

If members are advised by their independent financial advisers to request an increase in their fortnightly tax deductions to avoid having to pay additional income tax at the end of the current financial year, they should contact HR Shared Services to make that request.

  • Teachers North — 1300 338 001
  • Teachers South — 1300 338 002
  • Non-Teaching Staff in schools — 1300 338 003
  • Corporate Staff — 1300 338 000