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FBT and Living Away From Home Allowance (LAFHA) (Australia) Procedures

Parent Policy

Fringe Benefits Tax (Australia) Policy

A LAFHA is an allowance paid to an employee to compensate for additional expenses incurred and any disadvantages suffered because the employee is required to live away from their usual place of residence while performing their employment related duties.

Definition of terms

FBT: Fringe Benefits Tax
ATO: Australian Taxation Office
LAFHA: Living Away From Home Allowance
Taxable Value: Value of the fringe benefit before it is grossed up

Taxable Value

  • The taxable value of the LAFHA is the total amount of allowance paid to the employee, reduced by the exempt accommodation and food components.

Responsibility

Human Resources

Exempt Accommodation component

  • This is the amount of the allowance which is reasonable compensation for the cost of the accommodation of the employee (and family) while living away from home. It would be expected that the amount determined for reasonable costs should approximate the actual accommodation costs incurred by the employee.

Responsibility

Human Resources

Exempt Food component

  • This is the amount of the allowance that represents reasonable compensation for the increased cost of meals likely to be incurred for eligible family members as a result of living away from home. To assist in determining what is meant by the increased expenditure on food the ATO states that the amount of food consumed at home is:
    • $42.00 per week for each person 12 years or over at the start of the tax year
    • $21.00 per week for each younger person

    For the FBT year beginning 1 April 2008 the exempt reasonable food component of a living away from home allowance for 1 adult is $169.00 per week.

    Responsibility

    Human Resources

    Living Away From Home Allowance Declaration

    • The employer must obtain a completed Living Away From Home Allowance Declaration Form from the employee otherwise no reduction in taxable value applies.

    Responsibility

    Human Resources

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