Award Transport Payments 2026: Taxed Each Pay From 1 October
From Thursday 1 October 2026, employers must withhold tax from allowances that used to be paid as award transport payments. The Treasury Laws Amendment (Tax Reform No. 1) Act 2026 repealed the tax rules that set these payments apart, so they now go through the same tax tables as the wage they are paid with.
Published 30 September 2026 by Wage Calculator. Every figure below is traced to the government page that announced it, with that page’s own date.
The short answer
An award transport payment made on or after 1 October 2026 has tax withheld from it. Before that date, where it covered deductible transport expenses, the ATO varied the withholding on it to nil. The allowance itself does not change, and it was already taxable income. What changes is when the tax is taken: from each pay, rather than being left to your tax return.
On the ATO’s own example of a $22 a week allowance, that is $7 more withheld each week on any example wage from the National Minimum Wage to $2,500.00 a week, worked out below from the ATO weekly tax table. From the 2026-27 income year the ATO’s draft ruling LCR 2026/D5 also ends the exception that let a claim for transport expenses covered by the allowance be made without receipts.
What changed on 1 October 2026.
Award transport payments had their own rules in tax law. Because of them, the ATO varied the tax withheld from these payments to nil, and employers reported them separately in Single Touch Payroll as allowance type AD.
The Treasury Laws Amendment (Tax Reform No. 1) Act 2026 received royal assent on 26 June 2026. The ATO says it repeals the specific provisions in tax law relating to award transport payments, which “no longer exist as a distinct class of payments in the law” and “transition back into normal withholding”. For amounts that were award transport payments and are paid on or after 1 October 2026, employers must withhold from them and must stop identifying them as award transport payments in STP.
The date is a payment date. An award pay rise applies from the first full pay period starting on or after its operative date, but this rule turns on the day the money is paid. 1 October 2026 is a Thursday. An award transport payment made on Wednesday 30 September 2026 for deductible transport has nothing withheld from it; the same payment made a day later, even for work done in September, is withheld from in full.
The ATO’s allowance table splits it three ways. A payment for deductible transport expenses paid on or before 30 September 2026: no withholding. The same payment made on or after 1 October 2026: withheld from the total payment. A payment for non-deductible transport, such as travel between home and work: withheld from the total, as before.
What it takes from one weekly pay.
The ATO works its example with a fares and travel patterns allowance of $22 a week. By 30 September 2026 the employer had paid it 13 times, $286 in all, and it comes to $1,144 over the year, which leaves 39 weekly payments worth $858 after 30 September 2026. The table adds that $22 to five example wages and reads the tax withheld from the ATO weekly tax table for 2026-27, for an employee who claims the tax-free threshold and has no study loan.
| Weekly wage | Withheld on the wage | Withheld with the $22 | More each week | Over 39 weeks |
|---|---|---|---|---|
| $600.00 | $42 | $48 | $6 | $234 |
| $1,004.90National Minimum Wage | $139 | $146 | $7 | $273 |
| $1,500.00 | $299 | $306 | $7 | $273 |
| $2,500.00 | $619 | $626 | $7 | $273 |
| $3,500.00 | $1,002 | $1,011 | $9 | $351 |
The extra is the tax table’s rate on the last dollars of the pay, so it depends on the wage the allowance sits on top of, not on the allowance alone. The wages are examples chosen here, not ATO figures. Every withholding amount in the table is the figure printed in the Weekly Tax Table.
Tax withheld is a prepayment against the tax assessed on your return, not an extra tax. Whether the extra comes back at tax time depends on the whole return, including the transport expenses you can claim, which is where the second half of the change bites.
What changes at tax time.
The 2025-26 return
The ATO’s page for individuals, last updated 8 June 2026, still applies to the return for the year to 30 June 2026. You declare the whole award transport payment as income, even where it is more than the award paid on 29 October 1986.
You need no receipts or travel records if you incur transport expenses covered by the payment and claim less than that 29 October 1986 award amount. The ATO notes the exception does not give an automatic deduction: the expense still has to be incurred.
An estimate of that return is on the Tax Return Calculator.
From 2026-27
The ATO’s draft ruling LCR 2026/D5, published 26 August 2026, says that from the 2026-27 income year several substantiation exceptions for work-related expenses no longer apply. They are work expenses of $300 or less, laundry expenses of $150 or less, and certain transport expenses related to an allowance paid under an industrial instrument in force on 29 October 1986.
So for the year to 30 June 2027, a claim for transport expenses covered by one of these allowances needs the usual written evidence. The ruling is a draft and states the Commissioner’s preliminary view.
Your payslip and income statement.
Your employer stops reporting the allowance as award transport payments (allowance type AD) and picks the STP classification that fits it. In the ATO’s example the fares and travel patterns allowance moves to other allowances (allowance type OD) with the allowance code V1. The ATO gives employers two ways to make the switch, and the one they choose shows on your income statement at the end of the year.
- Cutover. Done before the first payment on or after 1 October 2026. The year shows two amounts: in the ATO’s example, $286 as award transport payments and $858 under the new classification.
- Zeroing out. An STP update event, lodged before 31 December 2026, moves the amount already reported to the new classification, so the year shows one amount: $1,144 in the example, and $308 after the first payment from 1 October 2026. An employer using it after 1 October 2026 must still withhold correctly from that date.
STP reporting that includes award transport payments cannot be lodged for payments made on or after 1 July 2027, so every employer has to switch during 2026-27.
Which allowances this covers.
Only allowances that were award transport payments: a transport allowance, or a cents per kilometre car reimbursement, paid under an industrial instrument that was in force on 29 October 1986. The instrument can be an award, an enterprise or collective agreement, a law or an order, and a later version that replaced a 1986 instrument counts as a continuation of it. The ATO says the most common were awards, and that your employer or union can tell you whether yours qualifies.
Two pages here publish award fares allowances paid on top of the weekly rate: Apprentice Electrician Wages and Apprentice Plumber Wages. Whether an employer has treated a fares allowance as an award transport payment is the employer’s call, and this site does not know it. The ATO’s own example is a fares and travel patterns allowance.
What does not change.
- The amount of the allowance. This is a change to tax law, and it does not alter what any award or agreement pays.
- That the allowance is income. The ATO’s page for individuals says the whole payment is declared on your return.
- Super. The ATO says expense allowances are not salary or wages and so are not ordinary time earnings, which means no super guarantee is paid on them.
- The tax on the wage itself. Withholding on the rest of the pay follows the same 2026-27 tables as before, which the Tax Withheld Calculator applies.
Where these figures come from.
Provenance
Verified- Withholding starts
- Payments made on or after 1 October 2026
- Last payment with nil withholding
- Paid on or before 30 September 2026
- Law
- Treasury Laws Amendment (Tax Reform No. 1) Act 2026
- Royal assent
- 26 June 2026
- STP code AD
- Cannot be used for payments from 1 July 2027
- Record-keeping exception
- Ends from 2026-27 (LCR 2026/D5, draft)
- Allowance amount changed
- No
- ATO, Changes to award transport paymentsThe page gave its own last updated date as 26 August 2026, its published date. Retrieved 30 September 2026.
- ATO, Withholding for allowancesThe page gave its own last updated date as 26 August 2026. Retrieved 30 September 2026.
- ATO, draft Law Companion Ruling LCR 2026/D5, The standard deduction for work-related expensesThe page gave its own last updated date as 26 August 2026, the date the draft was published. Retrieved 30 September 2026.
- ATO, Award transport payments (income, deductions and records)The page gave its own last updated date as 8 June 2026. Retrieved 30 September 2026.
- ATO, Allowances and reimbursementsThe page gave its own last updated date as 11 June 2025. Retrieved 30 September 2026.
Nothing on this page is copied from another pay site, and no figure here was taken from a search result summary. How every rate on this site is sourced and checked is set out on the Methodology page.
Award Transport Payments 2026 questions, answered.
What is an award transport payment?
The ATO defines it as a payment made under an industrial instrument that was in force on 29 October 1986, either as an allowance to cover transport expenses or as a cents per kilometre reimbursement for car expenses. The instrument can be an award, an enterprise or collective agreement, a law, or an order under a law, and a later version that replaced a 1986 instrument counts as a continuation of it. An allowance for accommodation, meals or incidentals while travelling away from home overnight is not one. The ATO says to ask your employer or union whether your allowance qualifies.
When does tax start coming out of award transport payments?
From payments made on or after 1 October 2026. The ATO's allowance table says an award transport payment paid on or before 30 September 2026 that relates to deductible transport expenses has nothing withheld, and one paid on or after 1 October 2026 is withheld from in full. The test is the day the allowance is paid, not the pay period it covers, so an allowance for work done in September but paid on Thursday 1 October 2026 has tax withheld.
How much more tax comes out of a $22 a week transport allowance?
On the ATO weekly tax table, for an employee claiming the tax-free threshold, $7 more is withheld each week on a wage of $1,004.90 (the National Minimum Wage), and the same $7 at $2,500.00 a week. On $600.00 a week it is $6, and on $3,500.00 it is $9. The $22 is the ATO's own example; the wages are examples chosen here. Add your own allowance to your gross pay in the Tax Withheld Calculator to see your figure.
Can I still claim award transport expenses without receipts?
For the 2025-26 tax return, yes, within limits. The ATO page for individuals, last updated 8 June 2026, says you need no written evidence or travel records if your claim for transport expenses covered by the payment is less than the amount the award paid on 29 October 1986. From the 2026-27 income year the ATO's draft ruling LCR 2026/D5 says that exception no longer applies, so a claim for those expenses will need the usual records. The ruling is a draft and states the Commissioner's preliminary view.
Is super paid on an award transport payment?
No, and that has not changed. The ATO says super guarantee does not apply to expense allowances and reimbursements, because they are not salary or wages and so are not ordinary time earnings. Super on your wage is shown on the Super Guarantee Calculator.
See the tax on a pay with the allowance in it.
Add the allowance to your gross pay for the period and see the PAYG withholding the ATO tax tables give for 2026-27.
Open the Tax Withheld Calculator