Is the vehicle allowance taxed?

Yes, in accordance with the ATO, any Vehicle Allowance paid over the reasonable allowance rate (as prescribed by the ATO) is required to be included within an employee’s taxable income. At the end of the financial year, the ATO says that employees who are taxed on vehicle allowances may be entitled to claim a deduction on their tax return for their motor vehicle expenses. (For more information visit https://www.ato.gov.au/ or speak to your accountant.)