LAFHA Australia – Living Away From Home Allowance

Information about LAFHA Australia – Living Away From Home Allowance

NB – LAFHA is no longer available
Going overseas to make your fortune, but still classified as an Australian Resident for taxation purposes, or coming from overseas and intending to make your fortune in Australia? Or even temporarily moving interstate for work?  Then you might be entitled to a Living Away From Home Allowance (LAFHA).

Obtaining a Living Away From Home Allowance:

Both Australian residents who move to another city/country, and expats who temporarily relocate to Australia for the purposes of work, may be eligible for LAFHA from their employer.

All one needs to do is to be able to demonstrate an intention to return to their permanent place of residence; be it overseas or interstate, after the cessation of their work contract.

What is Living Away From Home Allowance? How much is LAFHA?  And what can it do for you?

LAFHA is a tax free allowance, provided by an employer, for the purpose of compensating an employee for the additional expenditures incurred by having to move away from their normal place of residence. As a tax free allowance it provides additional income benefits for the employee.

The amount of LAFHA is determined by adding together two components: a food component, which is set by the ATO each year, and a rental component; an amount that is ‘reasonably’ required for rent.

So what is the ‘reasonable amount for rent’?

The ATO does not stipulate what is reasonable, although, through consultation with ourselves, such a figure can be assessed. In particular, we are obliged to consider the following types of factors:

  • Whether the employee will be accompanied by family members.
  • The position held by the employee in the workplace.
  • Where the employee will be living.
  • Whether the accommodation is furnished.
  • The employee’s living standards before the required move.

In most cases, the rental allowance given will reflect the employee’s actual rental expenditure.

LAFHA Benefits:

LAFHA gives an employee a tax free allowance that aims to offset the living costs incurred by working away from home. However it is also a real benefit to an employer, as it allows them to provide an increase in their employee’s net income, while not increasing the employee’s ‘cost to company’.

This makes LAFHA a win/win for both employer and employee.   If you have to live and work away from your home, why wouldn’t you ask your employer to give you LAFHA?

How we can help?

If you need assistance in incorporating the living away from home allowance (LAFHA) or need help with a LAFHA calculator, we are CPA-qualified payroll specialists and tax accountants and will help you understand what’s required. Contact us through the site or call (02) 9419 5322 for LAFHA assistance today!

 

Take advantage of our small business accounting services during which we will help you to refine your needs and consider an accounting and tax planning solution for your business going forward… make an online enquiry today or call us on +61 2 9419 5322 and let us help you solve your accounting or tax problems.