Changes to Living Away From Home Allowances

Recently the Federal Government announced significant changes to the taxation treatment of Living Away From Home Allowances which will eliminate or reduce many benefits currently available to foreign employees residing in Australia.

The changes include effectively abolishing all food and accommodation concessions for temporary residents working in Australia unless there is a “double” living away from home situation. LAFHA allowances will revert to be treated under the PAYG system and employees will need to claim deductions in their personal tax return.

Expense payment reimbursements will continue to be treated under FBT laws – as fully taxable in most instance.

The changes apply from 1 July, 2012 for new and existing arrangements.

This will particularly effect Australian subsidiaries of foreign companies that have transferred employees to the Australian operations.

Whilst we are  identifying those effected, we invite anyone with concerns to contact us to assess the impact of their arrangements.