Some contractors or entertainers working in the screen production industry receive per diem (per day) payments in addition to payment for their services.
Per diems
Per diems are payments you receive to cover the cost of meals and other minor expenses you may have when you are required to work away from the town where you normally live.
Per diems are part of your assessable income and are subject to tax. Payers are required to deduct tax from the payments made. On filing an income tax return, you need to include per diems as part of your income in the return.
You can claim tax deductions for work-related expenses against your assessable income. These are called allowable deductions. To claim deductions, you have to file a tax return. Generally you'll need to keep your invoices and receipts to support any deductions you claim.
Income Tax
We recently updated an expenditure determination applying to people working in the screen production industry.
Where you are required to work away from the town where you normally live and you incur expenses relating to your work and you receive per diems, the determination will apply to you. The determination deems the lesser of $100 or the amount of the per diems to be expenditure incurred in receiving the per diems (the deemed deduction).
This means that when you are working away from the town where you normally live:
- If you are incurring the expenses, your employer won’t be required to deduct tax from per diems of up to $100. This is because you are deemed to incur and deduct up to $100 of expenses.
- You will not be required to retain records of the expenditure for income tax purposes.
- Any excess over $100 will be taxable, and the employer will be required to deduct tax from it.
- If you wish to claim more than $100 of expenses for any given day, you will need to keep all your receipts and invoices for the day.
- You will need to include both the per diem and the deemed deductions in your income tax return.
The determination does not apply where you are not incurring some or all of the expenditure. That is, where the production company supplies some or all of the relevant goods or services (for instance, catering on set or elsewhere). In this circumstance:
- All of the per diem will be taxable.
- The payer will be required to deduct tax from the per diem.
- If you wish to claim deductions for other expenditure incurred, you will need to retain invoices and receipts to support your deductions.
- You will need to include the per diem and any deductions you claim in your income tax return.
If you are working in the town where you normally live, the per diems will be taxable, and generally you will not be entitled to claim deductions for the expenses as they are private expenditure.
Where you are GST registered, the $100 is the GST exclusive amount.
GST
If you are GST registered, you'll need to keep taxable supply information to complete your GST returns, regardless of how much you receive in per diems. You will need to charge GST on the per diems and include the per diems as taxable supplies in your GST returns. You may be able to claim costs where you are working away from the town where you normally live and taxable supply information is held.
How taxable supply information for GST works
Production companies
If you have a production where you will be paying a per diem of more than $100 and you can justify a higher amount, you can apply for a specific determination relating to that particular production.
You receive a per diem allowance of $100 and you are working away from the town where you normally live. You pay for the cost of the goods and services for which the allowance is paid. As you are working away from the town where you normally live the determination applies. The payer does not have to deduct tax from the per diems paid. You include the per diems and the deemed deduction in your income tax returns.
If you are GST registered, you will need to charge the screen production company GST on the per diems and include them in your GST returns. You will generally be entitled to claim the actual costs incurred for GST purposes and will need to retain taxable supply information in support of your claims.
You receive a per diem allowance of $100 and you are working in the town where you normally live. As you are not working away from the town where you normally live, the determination does not apply. The per diems you receive are income and you will not generally be entitled to deduct costs as they are private expenditure. The payer has to deduct tax from the per diems paid. You include the per diems in your income tax returns. You cannot claim the deemed deduction.
If you are GST registered, you will need to charge the screen production company GST on the per diems, and include them in your GST returns. You will generally not be entitled to claim the costs for GST purposes as the supplies were not received for the principal purpose of making taxable supplies.
You receive a per diem allowance of $100 and you are working away from the town where you normally live. You are also provided with all meals while working, either on the set or at some other location. The per diems are income. You will not be entitled to deduct the meal costs as you have not incurred those costs. If you have incurred other costs, you may be entitled to a deduction for those costs. In order to claim a deduction you will need to retain records of the costs. The payer has to deduct tax from the per diem payments to you. You include the per diems and deductions in your income tax returns. You cannot claim the deemed deduction.
If you are GST registered, you will need to charge the screen production company GST on the per diems and include them in your GST returns. You will not be entitled to claim meal costs for GST purposes as you have not received the supplies. For other costs, you will generally be entitled to claim the actual costs incurred for GST purposes, and will need to retain taxable supply information in support of your claims.
You receive a per diem allowance of $120 and you are working away the town where you normally live. You pay the cost of the goods and services for which the allowance is paid. You have incurred the costs so the determination applies. However, the $20 excess over $100 provided in the determination will be income. The payer will be required to deduct tax from the $20 excess and if you are claiming costs over $100 you will need to retain evidence of all costs. You include the per diems and deductions or deemed deduction in your income tax return.
If you are GST registered, you will need to charge the screen production company GST on the per diems and include them in your GST returns. You will generally be entitled to claim the actual costs incurred for GST purposes and will need to retain taxable supply information in support of your claims.