What is Overtime Meal Allowance?
Overtime Meal Allowance (allowance type MD) is a specific type of allowance provided to employees for meals consumed during meal breaks associated with overtime work. It is a deductible expense allowance defined in an industrial instrument.
The ATO (Australian Taxation Office) sets a reasonable amount for overtime meal allowances. If the amount paid to employees for overtime meals exceeds this reasonable amount, it should be reported using the allowance type MD in Single Touch Payroll (STP) reporting.
It’s important to note that amounts paid up to the ATO reasonable amount for overtime meal allowances are exempt from both PAYG (Pay As You Go) withholding and STP reporting.
However, allowances for meals that are not related to overtime work, such as those paid to workers during their ordinary hours on a night shift, should not be reported as overtime meal allowances in STP. Instead, they should be reported as other allowances (allowance type OD) using the allowance code ND.
In summary, Overtime Meal Allowance (allowance type MD) is a deductible expense allowance that compensates employees for meals consumed during meal breaks connected with overtime work. It is reported in STP when the amount paid exceeds the ATO reasonable amount.
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