Living Away From Home Allowance - Updates
- Arnold Shields
- Feb 1, 2012
- 2 min read
Updated: Jun 10
The Australian Government has introduced significant changes to the taxation of Living Away From Home Allowance (LAFHA) and reimbursements. These reforms tighten eligibility and substantiation requirements, particularly affecting temporary residents and employers.
What’s Changing?
From 1 July 2012:
Temporary residents can only access LAFHA tax concessions if they maintain a home in Australia for their exclusive use (not rented or sublet).
All employees must substantiate LAFHA expenses—receipts and records are essential. For food costs, ATO guidelines may be used instead.
LAFHA payments will be taxable income. Employees can claim deductions if they can substantiate their actual accommodation and food costs.
Expense reimbursements will generally be subject to Fringe Benefits Tax (FBT) unless they qualify for the limited concessions.
The allowable food component will be reviewed and adjusted to reflect current living costs.
Employer PAYG Withholding
If an employee is eligible to claim a deduction, employers can reduce the amount withheld from LAFHA under PAYG rules.
Who Is Not Affected?
These changes do not apply to:
Permanent residents
Employees on fly-in fly-out arrangements within Australia
Employees of community sector organisations, up to the FBT exemption cap
Disclaimer:
The information provided in this article is general in nature and does not constitute personal financial, legal or tax advice. While every effort has been made to ensure the accuracy of this content at the time of publication, tax laws and regulations may change, and individual circumstances vary. Dolman Bateman accepts no responsibility or liability for any loss or damage incurred as a result of acting on or relying upon any of the information contained herein. You should seek professional advice tailored to your specific situation before making any financial or tax decision.
