The Government announced that it would further reform the tax concession for living away from home allowances (LAFHA) and benefits by “better targeting it at people who are legitimately maintaining a second home in addition to their actual home for an initial period”. The changes would:
- limit access to the tax concession to employees who maintain a home for their own use in Australia, that they are living away from for work; and
- provide the tax concession for a maximum period of 12 months in respect of an individual employee for any particular work location.
The Government believes these further reforms “will stop employers from being able to give the tax concession to employees who aren’t maintaining a second home, or are maintaining 2 homes indefinitely”.
Exceptions: The proposed changes are designed not to affect:
- the tax concession for “fly in fly out” arrangements, as these employees will not be subject to the 12 month time limit; or
- the tax treatment of travel and meal allowances, which are provided to employees who have to travel away from their usual place of work for short periods (generally up to 21 days).
Date of effect: The changes will apply from 1 July 2012 for arrangements entered into after 7:30pm (AEST) on 8 May 2012, and from 1 July 2014 for arrangements entered into prior to that time.
The Government said it would consult with tax experts and employers on the technical detail of the legislation.
Source: Budget Paper No 2 [p 24]; Treasurer’s press release, 8 May 2012
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