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Who is entitled to a Living Away from Home Allowance?

From time to time, employees may be asked to work at a different site than their regular employment. This can happen for many reasons, such as for training or to cover personnel loss.

For many people, having to relocate can add to their expenses, especially if the move is only temporary. Fortunately, there is help available in the form of Living Away from Home Allowance (LAFHA).

What is a Living Away from Home Allowance?

The Living Away from Home Allowance is a payment made to people who work away from home on a temporary basis. The payment is made directly from an employer to an employee and is intended to cover expenses such as food, rent and other costs associated with having to work somewhere other than where an employee normally lives.

The allowance is generally paid in two components: food and accommodation. Both have restrictions on how much can be claimed.

LAFHA is approved by the Australian Taxation Office (ATO). This means it can be used to reduce taxable income, as the employer pays the tax, not the employee.

What is covered by a Living Away from Home Allowance?

A Living Away from Home Allowance does not cover expenses such as day-to-day travel costs or relocation fees, but these can be reimbursed to employees in different ways.

The most important thing to understand is that these are not blank cheques. Both accommodation and food are covered up to 'reasonable' levels.

For accommodation, this means living somewhere similar at the new work location. If the employee has a one-bedroom apartment at their usual place of residence, they will not be covered for a five-bedroom house when they move.

For food, there are limits that are set on an annual basis. Currently, for one adult, the limit is set as $265 for food and drink per week. Receipts must be kept to prove these expenses.

Who is eligible for the Living Away from Home Allowance?

There are several criteria that must be met to receive the LAFHA.

  • They must have accommodation (either rented or bought) in Australia, where they normally reside and intend to return to.
  • They must provide a declaration to their employer about living away from home.
  • It must be a temporary work location (more than 21 days but less than 12 months), unless they are a fly-in, fly-out style worker.
  • All costs must be deemed reasonable and they must have receipts for their expenses (such as food purchases).
  • Accommodation costs have no restrictions based on changes in fees across the country, however they must have similar accommodation during their time away from home as they have at their permanent residence.

Getting help with the Living Away from Home Allowance

If you would like some more information on the Living Away from Home Allowance, speak to our team at Active Accounting Group.

You can call us on (02) 4044 1245 or download our Living Away from Home Allowance fact sheet.

 

Tags: Fringe Benefits Tax (FBT)

21 Sep 2019

Brett Walker

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