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Reforms to LAFHA passed through Parliament

September 2012

The Assistant Treasurer has announced that proposed changes to LAFHA have passed both in the House of Representatives and the Senate.

Additional changes to LAFHA were proposed following a review by the House of Representatives Standing Committee on Economics.

One of the key changes is that LAFHA benefits will continue to be wholly taxed under the FBT regime. This is a positive change because practitioners and their clients would have had to deal with two sets of taxation rules from 1 October. Bringing the rules back within the FBT system should alleviate some of the administrative burden.

"Our reforms to the tax concession for LAFH allowances and benefits will ensure that this tax break can't be misused or exploited," said Assistant Treasurer David Bradbury.

"The tax concession will continue to support people who are bearing additional costs because they have to maintain a home in Australia that they are living away from for work purposes, for up to 12 months."

Other changes include:
  • Expanding the definition of eligible employees to include drive-in drive-out employees who use their own vehicles to travel to and from their workplace.
  • Expanding the definition of fly-in fly-out workers and drive-in drive-out workers for the purpose of the rules. Taxpayers who fall within these categories are subject to a relaxed version of the rules.
  • Ensuring that minor variations to an employment arrangement (e.g., normal annual salary increases) do not prevent employees from accessing the transitional rules.
For more information about how these changes affect you or your business, please contact us on 02 9957 4033 or via our contact form.

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Last updated September 2012. This article is provided for information purposes only and should not be used in place of advice from your accountant. Please contact us on 02 9957 4033 to discuss your specific circumstances.

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Disclaimer

This article is provided for information purposes only and correct at the time of publication. It should not be used in place of advice from your accountant. Please contact us on 02 9957 4033 to discuss your specific circumstances.

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