Most allowances are taxed as assessable income of the employee receiving the payment. As an exception, paying a living-away-from-home ('LAFH') allowance is treated as a fringe benefit and subject to (generally more concessional) FBT rules. An employer may also provide other concessionally taxed fringe benefits to assist a LAFH employee.

Whether an employee is living away from their usual place of residence (and therefore potentially eligible for these LAFH benefits) depends on the facts of each case. The ATO has released TR 2021/4, in which it considers the following factors to be relevant:

 There is a change in the employee’s regular place of work.

• The overall length of time spent working away from home – often meaning the longer an employee spends away from home, the more likely the employee is LAFH (rather than travelling).
• The nature of the accommodation.
• Whether the employee is, or can be, accompanied by family or visited by family.

 The ATO has acknowledged that it is often difficult to determine whether an employee is travelling to work, LAFH, or relocated. Accordingly, it has released PCG 2021/3 to outline its compliance approach to assist employers in making this decision.

Editor: When and how to access the LAFH FBT concessions in light of this recent ATO guidance is just one example of the topical issues being discussed by Andrew Gardiner and Rene Chan in the NTAA’s 2022 FBT seminar currently available in our Face to face, Live streamed and Online seminar formats.