Living Away From Home Allowance?

Working as a contractor can be a great way to experience parts of Australia – or even other countries – while boosting your skillset and earning a regular wage. It may even pay more.

That’s because when you’re asked to live and work away from your regular home, you’ll probably be entitled to a living-away-from-home-allowance (LAFHA) to compensate for additional expenses and even perceived disadvantages associated with doing so.

Examples of those entitled to a LAFHA, include:

  • An Australian resident sent, by their employer, to work in a foreign company for a set time, e.g. as an export consultant, diplomat, or immigration official,
  • A foreign or national worker who has been employed to work in one Sydney office but is then asked to move temporarily to work in another city/ town,
  • A construction worker living in camps, barracks, or huts,
  • An oil industry employee living on offshore oil rigs,
  • A marine industry employee living on board a ship,
  • A trainee employee undergoing training away from home for an extended duration (nb. This does not include being sent away to attend a short-term course),
  • A skilled person who is required to travel to a different town or state to train other staff in the company’s employment.

Your LAHFA is intended to offset the cost of your food, accommodation and other expenses associated with work that wouldn’t be incurred if you’d been living in your normal place of residence. It can also compensate for disadvantages such as isolation. It will be paid by your employer and could come in the form of:

  • An allowance,
  • Reimbursement for expenses you incur, or
  • A direct benefit – such as provision of living accommodation during your time away from home.

Your employer will ask you to sign a statutory declaration acknowledging that you will be living away from home for the duration of the relevant contract so that you can take advantage of LAHFA.

Tax Implications

Good to know is that your LAFHA will not be considered as part of your assessable income, however this also means you can’t claim any expenses against your assessable income, because of living away from home.

Your employer may be required to pay Fringe Benefits Tax on the allowance or benefits they have provided, and they may take this into consideration when negotiating your total remuneration package.

Finally, LAHFAs should not be confused with travel allowances which are paid to employees who travel for 21 or less consecutive days in a year.

Sound Complex?

The Ayers Group can reduce your administrative burden and help you to remain compliant with current tax legislation by managing your contracts, including time sheets, expense claims, invoicing and allowances including living-away-from-home allowances.

Contact an expert at the Ayers Group today.