Australian Living Away From Home Allowance Reforms Deferred

On June 28, 2012 the Australian Treasury’s office announced that the tax changes to the Living Away From Home Allowance (LAFHA) have been deferred for three months.  This announcement confirms the effective start date, for when the reforms will apply, as October 1, 2012.  This means no changes have been made and normal processes should continue until September 30, 2012.

Summary of ChangesSource: The Forum For Expatriate Management

The following changes to the exposure draft have been incorporated into the Tax Laws Amendment (2012 Measures No.4) Bill 2012:

  • The amendments to the living-away-from-home allowance and benefit rules will now apply from 1 October 2012, as opposed to the originally announced commencement date of 1 July 2012.
  • The “ordinary weekly food and drink expenses” for a seven-day period has been reduced from $110 AUD to $42 for each adult, and from $55 to $21 for each child under the age of 12 living with the employee.
  • That portion of a LAFH allowance which represents the “ordinary weekly food and drink expenses” of the employee (i.e., $42 per week for an adult) will be considered a fringe benefit and subject to Fringe Benefits Tax (FBT) where the employee provides his or her employer with a declaration.
  • The EM now contains further clarification regarding what constitutes a material variation to an existing employment arrangement for the purposes of the transitional provisions. The EM confirms that a change in salary constitutes a material variation, triggering the commencement of the new provisions.

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