Living Away From Home Allowance (LAFHA) Changes
30 November 2011
The Australian Treasurer Wayne Swan has announced today that access to the LAFHA tax exemption for temporary residents will be restricted. Temporary residents will now only qualify for the LAFHA tax exemption if they maintain a home in Australia from which they travel to other “fly in fly out” work. Employees will also be required to substantiate their actual expenditure on accommodation and food. As a result most temporary residents, such as those on 457 visas, look set to lose their entitlements.
In theory the change may also result in an increase of temporary visa holders applying for permanent residency, as currently some choose to delay their applications in order to take advantage of the LAFHA tax breaks. Wayne Swan also stated that “No permanent resident legitimately using this tax exemption for accommodation and food expenses will lose any entitlements.”
The changes are expected to be effective from 1 July 2012, and will have a major impact on foreign workers and the companies that employ them.