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  • Living away from home allowance fringe benefits

    A living-away-from-home allowance (LAFHA) fringe benefit may arise if you pay an employee an allowance to cover additional expenses and any disadvantages suffered due to them being required to temporarily live away from their normal residence to perform their employment duties.

    To assist you in determining if an allowance paid to an employee is for:

    • living at a location – which may be a LAFHA fringe benefit or
    • travelling on work – which will be a travel allowance that is assessable to an employee and will not incur Fringe Benefits Tax (FBT).

    You can use the guidance material in TR 2021/4Income tax and fringe benefit tax: accommodation and food and drink expenses, travel allowances and living-away-from-home allowances.

    Alternatively, if your arrangement meets certain criteria you can treat the arrangement as travelling on work and rely on our compliance approach in PCG 2021/3Determining if allowances or benefits provided to an employee relate to travelling on work or living at a location.

    Determining the taxable value of a LAFHA fringe benefit

    The taxable value of a LAFHA fringe benefit can be reduced by certain amounts relating to accommodation and food and drink expenses where:

    • your employee maintains a home in Australia at which they usually reside
    • your employee provides you with a declaration about living away from home
    • the fringe benefit relates to the first 12-month period at a particular work location.

    Employees who work on a fly-in fly-out or drive-in drive-out basis don't have to maintain a home in Australia and don't have the 12-month limitation.

    Where these conditions are not met, the taxable value of the fringe benefit is the amount of the allowance paid to the employee.

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    Last modified: 17 Nov 2021QC 43863