A Living Away from Home allowance (LAFHA) is an allowance that an employer pays an employee to compensate the employee for additional costs associated with living away from home (their usual place of residence).

A LAFHA can take several forms including:

1.    Reimbursements of the employee expenses

2.    Payment or provision of a benefit for the employee by the employer.  For example, accommodation.

3.    The payment of an actual allowance by the employer to the employee.

If you want to pay your employer a LAFHA, the Australian Taxation Office (ATO) has outlined the following for consideration:

1.    Ensure payments made to the staff qualify as LAFHA payments.

2.    Calculate the taxable value of the LAFHA.

3.    Is the employee a temporary of foreign resident?

4.    Does the employee maintain a home in Australia at which they usually reside?

5.    Does the employee work on a fly in fly out basis or drive in drive out basis?

6.    Have appropriate records be maintained including declarations?

If you would like to discuss further please contact us:
McNamara and Co - Chartered Accountants, located minutes from the Melbourne CBD
www.mcnamaraandcompany.com.au/contact-us
Phone +61 3 9428 1062
Email admin@mcnamaraandco.com

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