Menu

Living Away From Home Allowances Taxation Treatment Changed

The original reforms were going to remove LAFHA from the FBT regime completely and bring LAFHA into the Income Tax Regime, but a backflip has happened on this change.  The end result is that the current regime will continue but with significant changes, which are to "benefit people who are legitimately maintaining a home in Australia away from their actual home for an initial period".  The two major differences in LAFHA from 1st October 2012 are:
  1. The employee must maintain a home in Australia for their own use at which they usually reside.
  2. The concessional treatment is limited to a period of 12 months for an employee at a particular work location.
This will result in huge losses to non-resident employees, temporary residents and "457 Visa" employees in that a portion of their employment package cannot be paid to them under the hugely favourable LAFHA concessions.  This essentially means that only Australian residents, who maintain their own residence and provide a declaration of this fact to their employer, will still be eligible for LAFHA for a period of 12 months at a particular work location.  These changes do not apply to Fly-In/Fly-Out and Drive-In/Drive-Out employees.

Article provided by http://www.ESSBIZTOOLS.com.au.