A Living Away From Home Allowance is intended to compensate you for expenses incurred whilst you are working away on secondment or on a contract. These expenses include such costs as accommodation and meals. LAFHAs can also be payments to compensate you for other disadvantages such as isolation.
What is LAFHA?
If you are the one who is relocating or travelling or planning to stay away from home for a work-related purpose you can claim for LAFHAs.
With this approved allowance from ATO, an individual gets relief in the taxable income when living away from home with assistance in accommodation, food or drink, and other living costs.
LAFHA intends to provide enough compensation to individuals who work away from homes. The compensation includes accommodation, food, travel, and insurance-related expenses. The payment can be made in two parts/components – one is the Accommodation Component & the other is Food Component. However, there can be inclusion or exclusion of some extra costs or expenses like utilities, and others.
Who is Eligible to Claim LAFHA?
To be eligible for LAFHA, individuals must complete their employment responsibilities. Also, they must be living away from their primary residence with the continuation of its use at any period of time while working on their timely work duties and receiving LAFHA.
For an individual to be eligible for LAFHA, there are some eligibility considerations the employer needs to take care of:
- Must be living in Australia away from home and should be there for any work-related purpose.
- You should be away from home for more than 21 days
- An individual’s employment contract must be defined with a fixed term/tenure either by date or end of work contract.
- The individual must plan to return home while you are applying for LAFHA or getting paid.
What can be Claimed Under LAFHA?
Individual living and working away from home can claim for expenses, food/drink, and accommodation. But there are certainly other expenses that can also be included as claimable expenses under the Living Away from Home Allowance.
Some expenses are listed below:
- Accommodation: Accommodation at the permanent or primary location for up to 21 days.
- Temporary Accommodation: Accommodation at your new location for about four weeks.
- Travel Expenses: These expenses include flights, cab, transport, accommodation, meals, and drinks from your permanent location to your new residence. Keep a record of receipts to claim later.
- Other Utilities: Connection of basic amenities and services such as gas, telephone, or electricity for your new place.
- Extra Costs: Packing, unpacking, storage, logistics, packing & shifting, and insurance – all these extra costs are also claimable while moving from your permanent address to your new location for work.
Keeping Records of Expenses
You must keep records of your expenses and will need to give your employer either:
- documentary evidence of the expense such as receipts, credit card or bank statements (copies are acceptable)
- a declaration setting out information about the expense.
If you choose to provide a declaration to your employer, you must do so by the date on which your employer’s FBT return is due to be lodged with the ATO or, if they don’t have to lodge a return, by 21 May. You must also keep your documents to substantiate the expenses incurred for a period of five years from the declaration date. However, you do not need to keep the documents if you provide documentary evidence of the expense to your employer.
Still Confused? Ask For Expert Help
Are you a tradie living away from home and are wondering what expenses you can claim in your next tax returns? Getting in touch with an accountant that know the way the LAFHA works but also knows your business’ specific needs.
Are you an employee working away from home and are looking to claim LAFHA for your expenses incurred while living away from home? No matter your occupation, if you live away from home for more than 21 days (and meet other creteria above) you’re eligible to claim some deductions as part of LAFHA.
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