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Living away from home allowance

In certain instances employees may be entitled to a living away from home allowance (LAFHA).  This allowance is meant to cover the additional costs to the employee of having to move form their primary residence.  In Australia LAFHA is paid tax free and can therefore be a significant incentive.

For employees either transferring to Australia or taking up employment through a new Australian employer, and whom are arriving from abroad LAFHA may be allowable.  Significant allowances are available, such as:

• Reasonable accommodation allowance - this would be the cost of rental accommodation for an individual and their family (which can add to a significant amount)

• Reasonable food allowance - for a couple this amount is set at around $360 a week

This could represent up to $40,000 a year in allowances thereby reducing tax by nearly $20,000 at the top tax bracket.

The Australian Taxation Office (ATO) defines LAFHA as “a living away from home allowance fringe benefit that may arise if an employer pays an allowance to an employee to cover additional expenses incurred because the employee is temporarily required to live away from their usual place of residence to perform their employment duties”.

To find out more information on LAFHA, you should visit the following website: ato.gov.au

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