Reforms to Living Away from Home Allowance

The Federal Government recently announced changes to the Living Away from Home Allowance (LAFHA). The reforms will apply from 1 July 2012 for both new and existing arrangements.

From this date, LAFHA can only be claimed by people who maintain a home for their own use in Australia and who live away from this home for the purposes of performing work.

For example, if your company sends you to Karratha for work, you could only claim LAFHA if you have a home in, say, Perth.

In contrast, under the current LAFHA arrangements, many 457 visa holders claim the allowance on the basis that they usually reside overseas and are working in Australia on a temporary basis.

With effect from 1 July 2012, the following changes affect taxpayers who are currently receiving living-away-from-home allowances and benefits:
1. Access to the tax exemption for temporary residents will be limited to those who maintain a residence for their own use in Australia, but live away from this residence for work purposes, for example ‘fly-in fly-out’ workers.
2. Individuals will be required to substantiate their actual expenditure on accommodation and food.
No permanent resident who is legitimately using this tax exemption for accommodation and food expenses will lose any entitlements.

Please note that these reforms will not affect other tax concessions, such as those applying to travel and meal allowances and remote area fringe benefits.

For more details, please visit the ATO ( and LAFHA ( websites.