What is Laundry Allowance?
A laundry allowance((allowance type LD))is an allowance provided to employees for the purpose of washing, drying, and/or ironing uniforms that are required for business purposes. This allowance is typically paid at a regular rate for each week of work or services performed. It is important to note that the laundry allowance cannot include expenses or reimbursements for dry cleaning.
The term “uniforms” refers to the approved categories of clothing defined by the Australian Taxation Office (ATO) for specific job roles or industries.
In certain limited circumstances, there may be deductions allowed for conventional clothing if there is a sufficient connection between the clothing and the income-earning activities. However, specific measures defined by the ATO need to be followed in such cases. For the purposes of Pay As You Go Withholding (PAYGW) and super guarantee obligations, conventional clothing deductions are treated as “no measures defined by the ATO” and should be reported as “OD” (Other Allowances) under the description “G1 General.”
It is important to note that laundering expenses for other clothing items, apart from uniforms, are considered non-deductible for PAYGW and super guarantee purposes. These non-deductible laundering expenses should be reported as “OD” (Other Allowances) under the description “ND Non-deductible.”
Note: Services Australia categorises the laundry allowance as an Expense Allowance.
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