• 11.8 First 12 months employee is required to live away from home

    The fringe benefit has to relate to all or part of the first 12 months that an employee is living away from home in Australia for the purposes of their employment. The 12 months do not have to be consecutive.

    You can choose to pause the 12-month period – for example, you may choose to pause the period because the employee is taking leave, such as annual leave, long service leave or sick leave. This gives you the flexibility to pause the period when circumstances arise in which it is appropriate and beneficial to do so.

    The table below outlines how the 12-month period is affected by various employment situations.

    If… Then…

    You pause the 12-month period for the employee and continue to pay them a LAFHA

    The taxable value of the fringe benefit is not reduced by any exempt accommodation or exempt food component during the paused period.

    The full amount of the fringe benefit is taxable during the paused period.

    • The employee moves to another location to perform the duties of employment (the employee’s work location changes), and
    • it is unreasonable to expect the employee to commute to the new location from the earlier location for which a LAFHA was provided
     

    A new 12-month period starts at the new employment location.

    The balance of the 12-month period is available if the employee returns to the previous employment location.

    An employee takes up employment with an associate of their employer, and works in the same employment location

    The 12-month period is not affected – that is, it is accumulated under both employers; there is not a new 12 months under the associated employer.

    Any other changes in the nature of the employee’s employment are made within the same work location, such as changes to the conditions of employment (a promotion of the employee to a management position, or a change in the employee’s job title)

    The 12-month period is not affected.

    The employee takes up employment with a different employer, who is not an associate of their previous employer

    A new 12-month period starts when the employee changes employers.

    Example

    Jess receives a LAFHA from her employer while she is seconded to Brisbane for 12 months. Her normal place of residence is in Canberra. She is living in a serviced apartment in Brisbane.

    Part of the way through the secondment, Jess takes a month’s leave. Her employer wants her to complete a full 12-month secondment in Brisbane and pauses the 12-month period while she is on leave.

    During the paused period, Jess does not lease the serviced apartment in Brisbane and her employer does not pay her a LAFHA.

    When Jess resumes her secondment in Brisbane, the employer again pays her a LAFHA and the 12-month period recommences.

    Had Jess continued to lease the serviced apartment during the pause in the
    12-month period, and Jess’s employer continued to pay her a LAFHA during this time, Jess's employer would not have been able to reduce the taxable value of the LAFHA by the amount of the allowance paid for the period of leave.

    End of example

    Example

    Frank lives and works in Canberra. His employer asks him to work in Sydney for a period of nine months, for which a LAFHA will be paid. After that period of employment in Sydney, Frank returns to Canberra. The LAFHA fringe benefit provided to Frank for the nine months relates to part of the first 12 months that Frank is living away from his Australian home.

    At a later time, Frank’s employer asks him to work in Melbourne for a number of months. Because this is a new work location, a new 12-month period starts for any LAFHA paid to Frank during his time working in Melbourne.

    End of example

    Example

    James is living away from home and is paid a LAFHA by his employer. James’s employer undergoes a corporate restructure. James is transferred to a separate entity, who is not an associate of the employer, and works in the same work location. A new 12-month period commences for the new employer in James’s case.

    End of example

    Example

    Stephen is paid a LAFHA by his employer, a state government department, for living away from home. His employer transfers him to work, in the same location, for a state-owned corporation that is an associate of the department. The 12-month period continues and a new 12-month period does not commence in this case.

    End of example

    Example

    Ruth lives and works in Brisbane. For three months of the year, her job requires her to live away from her normal residence and work in Canberra. She returns to her normal residence in Brisbane for the remainder of the year.

    This arrangement continues for five years, during which time there is no change to Ruth's employer, work location and duties.

    In this case, the LAFHA paid by Ruth's employer is taxed concessionally in each of the first four years. In each of those years, only three months of the first 12 months are used.

    In the last year, the value of the fringe benefit is not reduced by any exempt accommodation or exempt food component because the benefit does not relate to all or part of the first 12 months that Ruth is living away from home while working at that same location.

    End of example
      Last modified: 23 Aug 2013QC 17825