How to set up the Fares and Travel Allowance

Overview

The Daily Fares and Travel Pattern Allowance, commonly called the Fares and Travel Allowance or Daily Travel Allowance, is an allowance payment included in the Building and Construction General On-site Award [MA000020].

Fair Work Requirements

Under Section 26.1 of the Building and Construction General On-site Award [MA000020], all employees (full-time, part-time, casual workers, and apprentices) classified under this Award, or any Enterprise Agreements deriving from this Award, are entitled to receive this Allowance when such employees:

• Start and finish work on a construction site (regardless of whether they use their own vehicle or public transport), or
• Perform prefabricated work in an open yard/depot and then erects or fixes it on-site that day.

By including this allowance as part of the worker’s standard pay, the Fair Work Commission acknowledges that, unlike other industries, construction workers must constantly travel to different sites without knowing or choosing how far away those sites will be. While regular office or factory employees commute to the same location daily, construction workers have no control over where their next job takes them.

The Allowance is structured as a daily rate, payable either when the employee uses their own vehicle (car or other types) or travels to the construction sites using public transportation.

Whilst adult workers are entitled to the Award full rate, apprentices only receive a percentage of the adult rate (typically ranging between 75% and 95%). The applicable percentage varies depending on the apprenticeship year in which they are currently enrolled.

Table illustrating the pro rata amount of the Allowance based on the Apprenticeship Year.

The Fares and Travel Allowance is paid exclusively for the days the employee attends work on-site using their own vehicle or public transport. It doesn’t apply when:

• the employee/apprentice has taken any paid or unpaid leave; or
• the apprentice attends mandated TAFE/Education days; or
• the employee is provided with a fully maintained company vehicle.

Finally, this Allowance exclusively covers travel between the employee’s place of residence and the first or last site. Travel between sites during the day is covered separately by the Car Km Allowance.

STP Reporting, Tax Implications and Superannuation

Because the Fares and Travel Allowance is designed to pay for travel between home and work, which the ATO classifies as private travel, PAYG withholding applies.

The Fares and Travel Allowance is deemed as Qualifying Earnings, attracting superannuation.

Employers must report this allowance through STP as Other Allowance (OD) ⇒ Private Vehicle (V1).

Payroll Tax and Workers’ Compensation Implications

The Fares and Travel Allowance is deemed both assessable wages for Payroll Tax (reported under the ‘Allowances’ section) and Rateable Earnings for Workers’ Compensation (reported under Gross Wages).

Set up the Fares and Travel Allowance Pay Item in Xero

1. In Xero, go to Payroll  ⇒ Payroll Settings
2. Select the [Pay Items] Tab ⇒ [Earnings]
3. Click on [Add] ⇒ Allowance
   • ➡️ The Allowance Pay Item screen
   • 
4. Select/Enter the following details:
   • Earnings Name ⇒ Type: Daily Travel and Fares Allowance [Day]
   • Type ⇒ Select: Other
   • Category ⇒ Select: Private vehicle
   • Display Name ⇒ Type: Daily Travel and Fares Allowance [Day]
   • Rate Type ⇒ Select: Rate per Unit
   • Type of Units ⇒ Type either: Hours (if you wish to include this pay item in Xero timesheets), if not, type: Days
   • Rate per Unit ⇒ type the daily rate as per the Award
   • Expense Account ⇒ Select: Wages & Salaries
   • Exempt from PAYG withholding ⇒ Do not select this option
   • Include in superannuation calculation ⇒ Select this option
   • Report as qualifying earning ⇒ Select this option
   • Report as W1 on Activity Statement ⇒ Select this option
   • Contributes towards annual leave rate ⇒ Do not select this option
   • Contributes towards overtime rate ⇒ Do not select this option
5. Click on [Add]

Add the Fares and Travel Allowance Pay Item to the Employee’s Pay Template

1. Go to Payroll ⇒ Employees
2. Open the employee’s details and click on the [Pay Template] Tab
3. Click on [+Earnings Line]
   • ➡️ The Earnings Line
   • 
4. Select/Enter the following details:
   • Earnings Rate ⇒ Select: Daily Travel Allowance
   • Calculation Type ⇒ Select: Use Earnings Rate
5. Click on [OK]
6. Repeat the above steps to add the second Car Allowance Pay Item (above the ATO Threshold)

Pay the Fares and Travel Allowance via Xero Timesheets

1. In Xero, go to Payroll  ⇒ Timesheets
2. Click on [Create timesheet]
   • ➡️ The Create a new timesheet screen opens
   • 
3. Select the employee and pay period and click on [Create]
   • ➡️ The Timesheets screen
   • 
4. Add the Earnings Rate Lines and select the Pay items required, including the Daily Travel and Fares Allowance
5. Type 1 Unit (= 1 Day) for each day the worker travelled from their home to the construction site and back
6. Click on [Approve]

Training Video