Australia: how the ATO taxes an agent's commission and work costs

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Kooky

Builder of Shaka, the payment router that pays every agent their commission on closing date.

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A commission cheque in Australian real estate is not the amount the salesperson keeps. Part of it is tax, part of it may already have been spent on petrol, phone calls, letterbox drops and a hamper for the vendor, and who pays superannuation on it depends on the terms of a contract. State agency agreement laws say how a commission is earned. What happens to it afterwards is a matter for the Australian Taxation Office.

This guide sets out what the ATO's own pages say, as they stood on 10 October 2026. It draws on the ATO's occupation guide for real estate employees, last updated on 11 May 2026, and on its pages about employees and contractors, car expenses, super and registering for goods and services tax. It covers what counts as income, how the employee or contractor question is decided and what follows for withholding and super, which work costs an employed salesperson can deduct, the records behind a claim, and when an agent in business must register for GST.

Australian Taxation Office: car expenses guidance (rate section updated 12 August 2026) and Registering for GST (updated 14 September 2026).

What the ATO counts as income

The occupation guide starts from a simple rule: an employee must include all the income received during the income year. It lists salary and wages, including cash or bonus payments, allowances, and compensation and insurance payments.

The list does not single out commission by name. The guide's own examples, though, leave no doubt about how it is read. Its salespeople are described as receiving a small base salary plus commission on the properties sold, or as working on a commission-only basis. Commission is what those employees are paid for their work, and it sits with the salary and bonus payments the guide tells them to include.

A reimbursement is not income. When an employer pays back the exact cost of something the salesperson bought for work, the amount is left out of the return, and no deduction is available for the expense it covered.

An allowance is income. The guide says any allowance shown on an income statement must be declared, and it sorts allowances into three kinds. An allowance paid towards an expense, such as a mobile phone or laundry allowance, is declared, and the employee may then claim the deductible costs actually incurred. An allowance that compensates for unpleasant or special working conditions is declared and carries no deduction. An allowance for a special skill or duty, such as acting as first aid officer or health and safety representative, is declared, and a deduction exists only if the employee really incurs a deductible expense in that role.

The guide adds that the deduction is usually not the same amount as the allowance. A property manager in one of its examples declares the whole laundry allowance and claims only what laundering the compulsory uniform actually cost.

One exception covers some travel and overtime meal allowances that are not shown on the income statement. Such an allowance is not declared, the guide says, unless a deduction is claimed against it.

Employee or contractor: the contract decides

Everything above, and every deduction below, comes from a guide written for employees. Whether a salesperson is one is a separate question, and the ATO answers it in the same way for every industry.

Its page on the difference puts it in two sentences: employees work in and are part of the business, while independent contractors provide services to a principal's business.

What settles the matter, the ATO says, is the legal rights and obligations in the contract between the two parties. That contract may be written, wholly oral, or a mix of written terms, oral terms and terms implied from conduct. The ATO attributes this approach to two High Court decisions, CFMMEU v Personnel Contracting and ZG Operations v Jamsek. How the parties behave day to day is generally not relevant, unless their conduct has varied the terms of the contract. The label the contract gives the relationship is not relevant either: calling someone a contractor does not make them one.

The ATO still uses a familiar set of indicators to read the contract. It stresses that none is decisive and that they are not a checklist.

One row matters to anyone paid on results. The ATO places commission on the employee side of the pay indicator. Being paid by commission alone therefore does not point to a contractor relationship; in the ATO's reading it is one of the ways an employee can be paid.

Two fixed rules sit beside the indicators. A company, trust or partnership engaged to do work is always treated as a contractor for tax and super purposes, because an employee must be a natural person. And apprentices, trainees, labourers and trades assistants are always treated as employees.

What follows for withholding and super

The classification decides who handles the tax on the commission before it reaches the salesperson's account.

For an employee, the ATO's page on tax and super obligations says the business must withhold tax from wages under pay as you go withholding and report and pay it to the ATO, pay super guarantee for each payday when the worker is eligible, and report and pay fringe benefits tax on any fringe benefits it provides.

For an independent contractor, the worker generally looks after their own tax, and the business does not withhold. The page names two exceptions: the contractor has not quoted an Australian business number, or the two have a voluntary agreement to withhold. The business has no fringe benefits tax obligations for a contractor. The same page states that wrongly treating an employee as an independent contractor is against the law.

Super is where commission earners are named outright. The ATO's page on super from an employer, updated on 1 July 2026, lists the earnings on which contributions are calculated. They include ordinary time earnings, described as earnings for ordinary hours of work together with certain over-award payments, allowances, bonuses and paid leave, and they include all commissions. Overtime is excluded.

The timing changed in 2026. From 1 July 2026, under what the ATO calls Payday Super, contributions are paid for each payday rather than each quarter, and the fund must receive the money, with the information needed to allocate it, within 7 business days after payday. Before that date, contributions were due within 28 days after the end of each quarter. An employer that does not pay becomes liable to a tax called the super guarantee charge.

A contractor is not automatically outside all this. The same page says an independent contractor paid wholly or principally for their labour is considered an employee for super purposes. The signs it gives are being paid for hours worked rather than to achieve a result, and doing the work personally. The contract must be directly between the worker and the business: it cannot run through another person or through a company, trust or partnership. Where the rule applies, super is payable on the labour component of the invoice. The ATO also notes that a business may choose to pay super for a contractor to avoid the charge. Whether a particular commission arrangement is "principally for labour" depends on its terms, and the pages read for this guide give no test in figures.

The three conditions behind every deduction

The occupation guide opens its deductions with three conditions that apply to everything after them. The employee must have spent the money and not been reimbursed. The expense must directly relate to earning the income. And there must be a record to prove it, usually a receipt.

Where a cost is partly private, only the work-related portion can be claimed. Where someone else pays, or pays the employee back, nothing can be claimed. In the guide's example, a salesperson whose vendors pay for the advertising cannot deduct it: the expense was never the salesperson's.

Car and travel between appointments

For a salesperson who spends the day between appraisals, inspections and open homes, the car is the largest question, and the starting point is restrictive. The guide treats normal trips between home and work as private.

It then lists the trips that are deductible:

• travel to an alternative workplace;
• travel between two separate jobs;
• home-to-work trips when bulky tools or equipment must be carried.

The last of these is read narrowly: the guide says plainly that a laptop is not bulky equipment. A further case, which the guide illustrates with an example, is the employee with shifting places of employment.

The ATO's car expenses guidance offers two ways to work out the claim for a car, which it defines as a motor vehicle carrying a load of less than one tonne and fewer than 9 passengers including the driver.

The cents per kilometre method applies one rate to each work kilometre, up to 5,000 kilometres per car per year. The rate covers all car expenses, so none can be added on top. No receipts are needed, but the claimant must be able to show how the kilometres were worked out.

A worked example, with assumed distances. A salesperson who drives 3,200 work kilometres in 2026-27 would claim 3,200 × A$0.91, or A$2,912. One who drives 6,400 work kilometres reaches the cap: 5,000 × A$0.91 gives A$4,550, and the remaining 1,400 kilometres earn nothing under this method.

The logbook method suits heavier use. The logbook must cover at least 12 continuous weeks, and it stays valid for 5 years. Each work journey is recorded in it. Logbook and odometer records are kept for 5 years after the end of the last income year they support.

For a car used under a salary sacrifice or novated lease arrangement neither method is available, though work parking and tolls can still be claimed. Parking at or near the regular workplace and tolls on the trip to it are private. Fines are never deductible: the guide's example is a red-light fine.

Phone, internet and working from home

The guide allows the work-related portion of phone, data and internet costs the employee pays for. A total claim of A$50 or less needs no records. A phone cost the employer reimburses is not income and carries no deduction, as one of the guide's examples shows.

Its worked figures show the method. A salesperson on a A$55 monthly plan finds that 90 per cent of calls and 70 per cent of data were for work, averages the two to 80 per cent, and claims A$44 a month; over the 10.6 months worked that year the deduction is A$466.40. A property manager with a A$1,200 annual internet bill and 40 per cent work use claims A$480.

For work done at home, the guide allows the additional running expenses that working there causes, calculated under either the fixed rate method or the actual cost method. Phone and internet cannot be claimed separately when the fixed rate method is used. Occupancy costs are generally not claimable unless part of the home is a place of business. The guide illustrates the point with a salesperson working in the lounge room.

Costs that only commission earners can claim

Here the guide draws a line that turns on how the employee is paid. Several costs are deductible only for an employee who is entitled to commission.

Advertising covers newspaper space, letterbox drops, signage and bunting, when the salesperson bears the cost. Decorating a property for sale, with flowers for instance, is deductible for a salesperson entitled to commission on that sale.

Gifts to clients are deductible for a salesperson or property manager whose income comes from commission, a retainer or both. The guide's examples are a hamper, wine, gift vouchers, flowers and a pen set. A gift in the form of entertainment, such as tickets to a sporting event, is not deductible for anyone, and neither are entertainment and social functions in general. A golf club membership of A$930 in one of the guide's examples is not deductible.

Wages paid to an assistant are the narrowest case. They are deductible for an employee who earns only commission, when the payment is for services that directly relate to earning it. A commission-only salesperson who pays a casual assistant at the award rate for 8 hours on Saturdays and 4 hours on Wednesdays can deduct those wages. A salesperson who pays his son A$100 a week to answer the home phone cannot. The guide's third example concerns a relative paid above the market rate: an agent paying her son A$50 an hour to deliver leaflets, when the market rate is A$21 an hour, can claim A$21.

Clothing, licences and study

Business dress is refused outright. Conventional clothing, including business attire, is not deductible. Grooming is not deductible either, even where an allowance is paid.

Four kinds of clothing do qualify: protective clothing, occupation-specific clothing, a compulsory uniform, and a registered non-compulsory uniform. Laundry is counted at A$1 a load when the load holds only qualifying work clothing and 50 cents when it is mixed with personal items. In the guide's example, 2 mixed loads a week for 40 weeks at A$0.50 come to A$40. A laundry claim of A$150 or less needs no written records.

On licences, the guide separates getting in from staying in. Renewing a real estate certificate of registration or a real estate licence is deductible. Obtaining the first certificate or licence in order to gain employment is not, and neither is a police clearance certificate obtained for that purpose. A driver's licence is private even when the job requires one.

Self-education follows the same logic. A course is deductible when it maintains or improves the skills needed for current duties, or is likely to increase income from the current employment. The guide's two examples mark the boundary. An employee who pays for a professional development course on short-term rentals can deduct it. One who enrols in a Bachelor of Commerce cannot. Repayments of study loans are not deductible.

Union and professional association fees are deductible, as are stationery and business cards. A tool or piece of equipment costing A$300 or less can be deducted in full in the year it is bought; a dearer item, such as the A$400 camera in the guide's example, is claimed through its decline in value over time, for the share of its use that is for work.

The records behind a claim

The guide's rule is that once an employee's total work-related claims exceed A$300, written evidence is needed for all of them, not only for the amount above the line. Written evidence, usually a receipt, must show the supplier's name, the amount, the nature of the goods or services, the date of purchase and the date the document was produced, and it must be in English when the expense is incurred in Australia.

Some claims need a second layer, such as the logbook for a car.

GST when the agent runs a business

GST enters only when the salesperson is carrying on an enterprise of their own, for example as a contractor. The ATO's registration page is addressed to businesses.

The ATO's registration page, updated on 14 September 2026, requires a business to register once its GST turnover is A$75,000 or more, and requires a new business to register if it expects to reach that figure in its first year. Turnover here means total business income, not profit, less the GST included in sales and a short list of exclusions such as input-taxed sales. It is tested two ways: current turnover is the current month plus the previous 11, and projected turnover is the current month plus the next 11.

A worked example, with assumed figures that exclude GST. A contractor salesperson whose commission invoices total A$6,500 in each of twelve consecutive months has a current turnover of A$78,000, above the threshold, and must register within 21 days of the requirement arising. One whose invoices total A$5,000 a month has A$60,000 and may choose. The ATO says a business that registers must generally stay registered for at least 12 months.

Missing the point of registration has a cost the ATO spells out: the business may have to pay GST on the sales it has made since the date it should have registered, even though no GST was added to those prices, and penalties and interest may apply. Registration can be backdated, by no more than 4 years unless there is fraud or evasion.

What these pages do not settle

The pages read for this guide do not state the super guarantee percentage, the hourly amount of the fixed rate method for working from home, the rate of GST, or the rate withheld when a contractor quotes no business number. None of them is given a figure in this guide.

The occupation guide is written for employees only. A salesperson who really is in business claims expenses under the rules for businesses, which that guide does not cover, and the conditions attached to commission in it should not be carried across.

Kooky, from Shaka

Kooky edits Agents Estate and builds Shaka, the payment router he made for real estate professionals. One payment comes in, and every agent, agency and party in the deal receives their signed share on closing date.

About Kooky and Shaka →