Living Away From Home Allowance Fringe Benefit

A Living Away From Home Allowance fringe benefit is

  • an allowance paid by an employer to an employee..
  • which is in the nature of compensation for..
  • additional non-deductible expenses and disadvantages..
  • caused by employment duties which..
  • require the employee to live away from his or her normal place of residence

(s30 FBTAA)

A place of residence is where a person resides or has sleeping accommodation.

Note: The following information is a summary, and should not be relied upon as the final word in this complex area. Please consult references for essential detailed guidance.

Not relocation, and not travelling

Neither relocation expenses nor travelling expenses are in the nature of a Living Away From Home Allowance, and therefore do not fall within these rules. In general, an allowance which is not a LAFHA is not subject to FBT and will be taxable in the hands of the employee.

  • See also: ATO ID 2013/43 Living-away-from-home allowance fringe benefits: fly in fly out and drive in drive out requirements. The ATO’s view is that the requirements of 31E(a)(i) of the FBT Assessment Act [working on a “regular and rotational basis”] are not satisfied where an employee works for five and half days and remains on call on the seventh day.

FBT taxable value of a Living Away From Home Allowance

The taxable value of a LAFHA fringe benefit is the amount of the allowance reduced by any exempt accommodation and food components .

  • The exempt accommodation component is the amount of the additional costs actually incurred (which need to be reasonable in the circumstances); and
  • The exempt food component is equivalent to the amount of additional food costs incurred by reason of having to work away from home.

Commissioner’s Reasonable Food and Drink Costs Schedules

Food costs which are deemed reasonable are stipulated by way of a Tax Determination produced by the Tax Office on an annual basis. Higher claims require the full amount to be substantiated. (s31G)

See also: LAFHA

  • 2018-19 FBT year: The schedule of reasonable food costs for the year ended 31 March 2018 is provided in Tax Determination TD2018/3

2017-18 FBT year: The schedule of reasonable food costs for the year ended 31 March 2018 is provided in Tax Determination TD 2017/5

2016-17 FBT year: The schedule of reasonable food costs for the year ended 31 March 2017 is provided in Tax Determination TD 2016/4

2015-16  FBT year: The schedule of reasonable food costs for the year ended 31 March 2016 is provided in Tax Determination TD 2015/7

2014-15  FBT year: The schedule of reasonable food costs for the year ended 31 March 2015 is provided in Tax Determination TD 2014/9

2013-14  FBT year: The schedule of reasonable food costs for the year ended 31 March 2014 is provided in Tax Determination TD 2013/4

2012-13 FBT year: The schedule of reasonable food costs for the year ended 31 March 2013 is provided in Tax Determination TD 2012/5*

* 2013-14 transitional measure: where there is an existing employment agreement in force as at 27 February 2013 that specifies a rate in Taxation Determination TD 2012/5 and that employment agreement is not varied in a material way or renewed, the rates in TD 2012/5 will continue to be accepted by the Commissioner as reasonable – see TD 2013/4 paragraph 19.

Statutory Food Amounts

The taxable value of a LAFHA fringe benefit includes any part of the LAFHA allowance which represents the normal food costs the employee would have had by not leaving home.

The costs deemed to be normal:

  • For each person aged 12 years and over at the beginning of the tax year (1 April): $42 per week; and
  • For each child under 12 years of age: $21 per week.

statutory food amounts
FBT on the “normal” amounts may be avoided if the reasonable total food costs worked out in accordance with the Tax office determinations mentioned above are reduced by the Statutory Food Amounts, in essence burdening the employee with the costs. Evidence should be retained of having taken the Statutory Food Amounts into account when calculating the food allowance. (refer s31H)

Conditions and Qualifications

Required to maintain a home in Australia (s31C)

From 1 October 2012, to access the exemptions, the employee is required to maintain a residence in Australia.

  • This condition is deferred for Australian permanent resident employees until 30 June 2014 for arrangements which were in place on 8 May 2012 and which haven’t materially altered.
  •  This condition does not apply to fly-in-fly-out or drive-in-drive-out workers.
12 months limitation (s31D)

From 1 October 2012, the exemptions are only available for the 1st 12 months of a LAFH arrangement. A new 12 month period can be commenced for work at a new location (regardless of the nature of the work) if it would be unreasonable to expect the employee to commute. An employer may pause the 12 month period, during which time the allowance exemption would not apply.

  • This condition is deferred for Australian permanent resident employees until 30 June 2014 for arrangements which were in place on 8 May 2012 and which have not materially altered.
  •  This condition does not apply to fly-in-fly-out or drive-in-drive-out workers.
 Declarations

To meet all relevant requirements, declarations must be provided to the employer no later than the FBT return lodgment date, or if no return is required, by 21 May. The Tax Office has supplied declaration formats, including

  • For employees who received a living-away-from-home allowance or benefit for accommodation and food or drink before 1 October 2012 and employees who are permanent residents who qualify for the transitional rules from 1 October 2012:
  • For employees who received a living-away-from-home allowance or benefit for accommodation and food or drink from 1 October 2012 and work on a fly-in fly-out or drive-in drive-out basis.
  •  For employees who received a living-away-from-home allowance from 1 October 2012 to provide their employer with information about accommodation and food or drink expenses, except where the employee has provided their employer with the documentary evidence.
  • Employees who received a living-away-from-home allowance or benefit for accommodation and food or drink from 1 October 2012, including temporary or foreign residents who live away from where they usually reside when in Australia.
Substantiations (s31Gs31H)

Reasonable amounts of food and drink up to the ATO’s determined reasonable amounts do not need to be further substantiated.

Amounts for accommodation, and for the full amount of food and drink allowances the total of which is in excess of the Commissioner’s reasonable amounts, are required to be fully substantiated, which therefore requires that documentary evidence be held.

Further information

 

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This page was last modified 2018-12-18