Living Away From Home Allowance Fringe Benefits

Introduction

A living away from home allowance (LAFHA) is paid where an employee has moved and taken up temporary residence away from his or her usual place of residence to carry out employment duties. A fringe benefit arises when this allowance is paid.

Taxable Value

The taxable value is the amount of the recipient's allowance, less the exempt accommodation component and / or any exempt food component.

LAFHA - Accommodation Component

An allowance provided by an employer for the purposes of accommodation is FBT exempt if the amount provided is considered reasonable and necessary to compensate the employee for the cost of accommodation whilst living away from home.

LAFHA - Food Component

The exempt food component of a LAFHA is the amount of the allowance that is reasonable compensation for additional expenditure on food because the employee is required to live away from their usual place of residence.

The ATO publishes an annual tax determination advising the amount of food allowance it considers reasonable for an employee who is living away from home. This table provides the total weekly allowance, of which the first $42 per adult per week and $21 per child under 12 years of age per week are deemed the normal food costs (statutory component) which are subject to FBT.

The difference between the total weekly allowance and the normal food costs is deemed to be the incremental cost due to living away from home and is exempt from both income tax and FBT.

The University by paying only the incremental amount of the cash food allowance, the entire food allowance can be provided free of tax as well as reducing the overall compliance costs of providing the benefit.

Eligibility

Staff members should refer to the Human Resources (HR) website for further details on whether they qualify for a LAFHA after completing an employee checklist (Word, 248KB).

In order to claim LAFHA benefits, staff must complete a LAFHA declaration (Word, 232KB) at the start of each FBT year.