ARTICLE · 12 DECEMBER 2011

FBT reforms – Living-away-from-home targeted

Norton Rose Fulbright Australia

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Treasury proposes to remove the concessional treatment of the LAFH allowance paid to temporary residents in Australia.

AustraliaTax

David Stavropoulos

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The Federal Government announced last week as part of the Mid-Year Economic and Fiscal Outlook that it will reform the tax treatment of the living-away-from-home (LAFH) allowance and benefits.

The Government proposes to remove the concessional treatment of the LAFH allowance (LAFHA) paid to temporary residents working in Australia. The changes are intended to apply from 1 July 2012 for both new and existing arrangements.

The changes are in response to claims by the Inspector General of Taxation, the Australian Taxation Office and more recently at the 2011 Tax Forum that the LAFH benefits are being exploited.

What are the changes?

Treasury has released a Consultation Paper outlining the proposed amendments. The key changes are as follows:

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