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  • Difference between a living-away-from-home allowance and a travelling allowance

    It's important to determine whether an allowance is a LAFHA or a travelling allowance – both have different tax treatments as:

    • LAFHAs are a fringe benefit
    • travelling allowances are part of the employee's assessable income and aren't fringe benefits.

    The following table sets out some of the indicators of whether an allowance is a LAFHA or travelling allowance:

    Living-away-from-home allowances

    Travelling allowances

    This is paid where an employee has taken up temporary residence away from their usual place of residence in order to carry out duties at a new, but temporary, workplace.

    This is paid because an employee is travelling in the course of performing their job.

    There is a change of job location in relation to paying the allowance.

    There is no change of job location in relation to paying the allowance.

    Where an employee is living away from home, it's more common for that employee to be accompanied by their spouse and family.

    Where an employee is travelling, they are generally not accompanied by their spouse and family.

    They are paid for longer periods.

    They are paid for short periods.

    They change residence (temporarily) in relation to the payment of the allowance.

    They have no change of residence.

    The indicators above are guidelines only and no single indicator determines the nature of the allowance received. For example, a travelling allowance might be paid to a commercial traveller almost continuously, whereas another employee may receive a LAFHA for only a month.

    There may be circumstances when an employee is away from their home base for a brief period in which it may be difficult to determine whether the employee is living away from home or travelling. As a general rule, where the period away doesn't exceed 21 days, the allowance will be treated as a travelling allowance – instead of a LAFHA.

      Last modified: 23 Jun 2017QC 32577