11 September, 2012

On 21 August 2012, Australia’s Tax Laws Amendment (2012 Measures No. 4) Bill 2012 (the Bill) was passed by the House of Representatives. The legislation contains changes to the tax treatment of living-away-from-home (LAFH) allowances and benefits.

Note:

While the Bill must pass the Senate and receive Royal Assent, the Opposition has indicated that it would not oppose the Bill. As a result, It is expected the passage of the Bill through the Senate to occur quickly. From this point in time, the Bill would be considered substantially enacted and employers can begin implementing processes to address the changes, although the Australian Taxation Office will need to confirm reasonable food rates and the approved format for declarations required by the legislation.

Summary of the Bill

• The taxation of LAFH allowances and benefits will continue to occur wholly within the fringe benefits tax (FBT) regime.
• Access to concessional treatment will primarily depend on:
  • o The employee “maintaining a home in Australia” (including availability criteria); and
  • o The fringe benefit relating only to the first 12 months that the duties of employment require the employee to be living away from home.
• An exception may apply for employees operating in industries where it is customary to work on a shift pattern or rotational basis. These employees may still access concessional treatment even in circumstances where they are not “maintaining a home in Australia” or where fringe benefits are provided for a period exceeding 12 months.
• Transitional provisions will apply to permanent residents who were LAFH as of 8 May 2012, allowing them to access concessional treatment after 1 October 2012, even where they are not “maintaining a home in Australia”.
• Transitional provisions will not apply to temporary or foreign residents in most cases, as to access concessional treatment after 1 October 2012, they will need to be “maintaining a home in Australia.”