Its not surprising that the government has become increasingly concerned that employers & employees are widely expoliting the living away from home allowance concessions especially given the increased popularity of fly-in, fly-out arrangements.
As the nation experiences a resource boom we are seeing an increased amount of taxpayers being paid living away from home allowance (LAFHA) and travel allowances which has sparked a proposed overhaul of the allowances and their tax treatment.
A living away from home allowance is basically an allowances paid to an employee to compensate them for additional expenses incurred as a consequence of the employee being required to live away from their usual residence for employment purposes.Currently, a LAFHA is concessionally taxed because their taxable value of such a benefit is reduced for any reasonable amounts paid as compenation for increased expenditure on accomodation and food.
Specifically, the government will seek to address the deficiences noted above by ensuring that:
- Access to the LAFHA concessions for twmporary residents will be limited to those who maintain a hom efor their own use in Australia (which they are required to live away from home for work); and
- In all cases, an employee will be required to substantiate their actual expenditure on accomodation and on food (above a specified staturoy amount).
In another significant change, in order to implement these reforms, the taxation of a LAFHA will be moved from the FBT regime to the income tax system.
If you believe you or your employees could be effected by this reform, please call us to discuss your concerns.