Look at your income statement and you will probably see a line for a site allowance, a tool allowance, maybe an allowance for working underground or in the wet. It is easy to read those as money the tax office already knows you spent, and to assume each one is a deduction waiting to be claimed. That assumption costs site workers more than almost anything else on the return, in both directions: some claim allowances that were never deductible, and some pay tax on an allowance while missing the real expense sitting right next to it.
An allowance is not a deduction
Start here, because everything else follows from it. Money your employer pays you as an allowance is usually assessable income: it goes on your return and you pay tax on it, the same as your ordinary wages. An allowance only produces a deduction if you actually went out and incurred an expense that would be deductible on its own, and even then the two figures are independent. You could receive a $500 allowance and spend $200, or spend $700 and receive nothing.
Treat the income and the expense as two separate lines that happen to sit near each other.
The allowances that are taxable but earn you nothing back
Some allowances exist to compensate you for the conditions you work in, not for anything you buy. These are assessable income you declare, and there is no matching deduction, because you did not incur an expense in the first place.
- Site allowance. Extra pay for working on a particular site, taxed like the rest of your wages.
- Industry allowance. Compensation for the conditions of the industry, not an expense you incurred.
- Inclement-weather allowance. Extra pay for standing in the rain, and nothing more.
- Underground allowance. Extra pay for working below ground, taxed the same as everything else.
Declare it, and claim nothing against it. Money paid for discomfort is income, and there is nothing to claim against it.
The allowances that point to a real expense
Other allowances sit next to a cost you genuinely carry, and those are the ones worth working through, because a deduction may be waiting once you look at what you actually spent.
Overtime meals
A meal you buy while working overtime can be deductible, but only when a specific set of conditions all hold: the overtime-meal allowance has to be paid under your industrial award or agreement, shown as a separate allowance on your income statement, and declared by you as income. If those are true, you can claim the cost of the meal you bought and ate during that overtime. Up to the ATO's reasonable amount for overtime meals you do not need receipts, though you still have to show how you worked the claim out. Claim above the reasonable amount and you need written evidence for the whole thing, not just the excess. The reasonable amount changes each year, so check the current figure rather than carrying an old one across.
The line that catches people is the everyday one. An ordinary meal on an ordinary shift is never deductible, even if your employer pays you a meal allowance for it. The overtime-meal rule is narrow on purpose, and a general meal allowance does not open it.
Working away, and the living-away trap
This is the crux for FIFO and drive-in drive-out workers, and it is where a lot of money goes wrong. Two situations look similar from the ute and are treated as opposites by the tax office.
When your job requires you to sleep away from home for a stretch, and you are not reimbursed, the accommodation, meals and incidentals you pay for during that trip can be deductible. A travel allowance paid for those short trips away is assessable income you declare, and you claim the actual costs you incurred.
A living-away-from-home allowance is a fringe benefit, not ordinary income. It does not go on your tax return at all, and because it does not, you cannot deduct the accommodation or food it covers. Those are treated as your private living costs, the same as rent and groceries anywhere else.
The difference turns roughly on how settled the stay is: a shorter trip leans towards travelling, where a travel allowance and deductions are in play, and a longer, settled stay leans towards living away, where a living-away allowance applies and no deduction follows.
A "living-away" allowance earns you no meal or accommodation deduction. If your away arrangement is genuinely living away, the money the allowance covers is private.
The records to keep
The paperwork here is simple once you have separated the two sides.
- Every assessable allowance that shows on your income statement, the site and tool and travel ones included, declared in full.
- Receipts for the expenses you actually claim, the tools, the laundry, the overtime meals above the reasonable amount, the travel costs on genuine overnight trips.
- A short note of your reasoning for each claim, especially the overtime-meal working and the basis for treating a trip as travel rather than living away.
The bottom line
Whenever an allowance shows on your income statement, do the two things in order: declare the allowance as income, then ask separately whether you actually incurred a real, deductible expense, and claim only that. The site and underground allowances are income and nothing more. The tool, laundry and first-aid allowances are income, and your claim is your actual spend, not the allowance figure. Overtime meals count only under the award, declared and worked out. And a living-away allowance for FIFO work is not on your return and buys you no deduction at all.
See what your real expenses come to once you separate them from the allowances on your statement.
General information only, not tax advice. Check the ATO or a registered tax agent for your situation.