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Edited version of your private ruling
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Subject: Income - allowance - LAFHA
Question 1
Is your allowance, which is labelled as LAFHA on your PAYG payment summary, considered to be a bona fide living-away-from-home allowance (LAFHA)?
Answer
Yes.
Question 2
Does your LAFHA have to be included in your assessable income?
Answer
No.
This ruling applies for the following period:
Year ended 30 June 2011
The scheme commences on:
01 July 2010
Relevant facts and circumstances
You are employed on a casual basis.
In the course of your employment you are required to travel.
Each day that you were required to stay away from home overnight you were paid an allowance.
Your employment agreement describes the allowance as living away from home not in camp.
Your employment agreement does not provide a cost breakdown of this allowance.
Your employer has included this allowance on your PAYG payment summary as a taxable allowance. However, they state that the allowance is not assessable.
Your have a usual place of residence which is maintained by your partner when you are away.
Relevant legislative provisions
Income Tax Assessment Act 1936 Section 23L,
Income Tax Assessment Act 1997 Section 15-2,
Fringe Benefits Tax Assessment 1986 Subsection 30(1) and
Fringe Benefits Tax Assessment 1986 Subsection 136(1).
Reasons for decision
A fringe benefit is a benefit provided to somebody because they are an employee. An allowance which constitutes a fringe benefit, under the Fringe Benefits Tax Assessment Act 1986, is not included in an employee's assessable income.
Taxation Ruling MT 2030 states that a LAFHA exists to provide compensation to the employee for the additional expenses incurred because they are required to live away from their usual place of residence in order to perform the duties of employment.
A LAFHA is an allowance which constitutes a fringe benefit.
In your situation, it is considered that you are receiving a bona fide LAFHA. This allowance should not have been included in your PAYG payment summary and as such it is not required to be included in your assessable income for the 2010-11 financial year.