Deferral of changes to the taxation of Living Away From Home Allowances

On 28 June 2012 the Government introduced to the House of Representatives the legislation covering changes to the taxation of Living Away From Home Allowances (“LAFHA”).

Importantly, the start date for the new laws has been deferred to 1 October 2012, from the originally announced 1 July 2012.

Apart from a number of minor technical matters, the proposed law remains substantially unchanged from that released in the Exposure Draft legislation.

We will provide a detailed analysis of the new LAFHA rules when they become law.

What does the deferral mean?

For the period 1 July 2012 until 30 September 2012, LAFHAs will continue to be taxed under the Fringe Benefits Tax (“FBT”) laws as they currently apply.  The existing FBT exemptions for expense payment benefits and housing benefits (as they apply to employees living away from home) will also continue to apply until 30 September 2012.

To prepare for the new laws, it will still be necessary to identify and categorise employees who are receiving a LAFHA, and determine whether they will be able to utilise the transitional rules.

However, the deferral means that any adjustments that were proposed to employment arrangements because of the LAFHA changes (for instance, adjusting an employee’s remuneration package), can be delayed until 1 October 2012.