Changes to the tax treatment of living-away-from-home allowances (LAFHA) and benefits
Changes have been made to the concessional tax treatment of fringe benefits tax (FBT) for living-away-from-home allowance (LAFHA) and benefits. If you are an employer and you provide any living-away-from-home allowances and/or benefits to your employees, or are considering doing so in the future you need to be aware of these changes.
A living away from home allowance (LAFHA) is an allowance the employer pays to their employee to cover additional expenses incurred and any disadvantages suffered because their duties of employment require them to live away from their normal residence.
From 1 October 2012, access to the tax concessions for living away from home allowances and benefits will usually be limited to a 12-month period for an employee at a particular work location.
The fringe benefit has to relate to all or part of the first 12 months that an employee is living away from home in Australia for the purposes of their employment.
You can choose to pause the 12 – month period. For example, you may choose to pause the period because the employee is taking leave, such as annual leave, long service leave or sick leave.
Special rules apply to fly-in fly-out and drive-in drive-out workers. These employees:
•Do not have to maintain a home in Australia for their own use and enjoyment for the concessional tax treatment to apply in relation to fringe benefits
•Are not limited to a 12 month period for the concessional tax treatment
However, the employee still must:
•Substantiate their expenses incurred on accommodation and food and drink
•Provide a their employer with a declaration relating to living away from home
If you believe you are entitled to the living-away from-home allowance (LAFHA) or have questions, our professional and experienced accountants and lawyers at The Quinn Group can assist you. Submit an online enquiry or contact us on 1300 QUINNS (1300 784 667) or +61 9223 9166 to book an appointment.