Living-away-from-home tax changes — legislation progressing

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Living-away-from-home tax changes — legislation progressing

The legislation will provide that the tax concessions relating to living-away-from-home allowances would be targeted at people who are legitimately living away from their actual home in Australia (which they continue to maintain) for an initial period.

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The legislation will provide that the tax concessions relating to living-away-from-home (LAFH) allowances would be targeted at people who are legitimately living away from their actual home in Australia (which they continue to maintain) for an initial period.

The government welcomed the passage of the Tax Laws Amendment (2012 Measures No. 4) Bill 2012 through the House of Representatives this week (21 August 2012).

‘Our reforms to the tax concession for LAFH allowances and benefits will ensure that this taxpayer-funded tax break can’t be misused or exploited,’ said Assistant Treasurer David Bradbury.

‘The tax concession will continue to support people who are bearing additional costs because they have to maintain a home in Australia away from their actual home for work purposes, for up to 12 months.’

The Bill included government amendments in response to the recommendations made by the House of Representatives Economics Committee.

‘The Committee’s report supported the policy intent of the reforms but identified a number of improvements in the drafting,’ said Bradbury.

‘The Government amendments introduced pick up on all of the key recommendations in the Committee’s report to ensure the reforms operate as intended.’

Amendments to Bill
 
These amendments will:
  • ensure LAFH allowances are taxed entirely within the fringe benefits tax system rather than in the personal income tax system or a combination of both
  • expand the definition of fly-in fly-out workers and drive-in, drive-out workers for the purposes of the reforms, so those workers who live at home with their parents, or whose home on ‘off’ days is in a country other than Australia, do not lose the concessional tax treatment
  • expand the definition of drive-in drive-out workers for the purposes of the reforms, so it includes workers who use their own vehicle to travel to the workplace
  • amend the circumstances in which the 12-month time limit will pause, to provide certainty and simplicity
  • ensure the provisions that prevent people accessing the transitional treatment if they ‘vary’ an existing arrangement only apply to ‘material variations’ and do not prevent minor changes such as normal salary increases.
Commencement
 
In response to submissions received as part of earlier consultation processes, the government announced in June that it was deferring the general start date of the reforms from 1 July 2012 to 1 October 2012 (with the reforms announced at Budget applying from 1 July 2014 for arrangements entered into prior to Budget night).

Unaffected
 
These reforms will not affect:
  • the tax concession for fly-in fly-out and drive-in drive-out arrangements, because these employees will not be subject to the 12-month time limit
  • the tax treatment of travel and meal allowances, which are provided to employees who have to travel from their usual place of work for short periods (generally up to 21 days)
  • the tax concessions that are provided for remote area fringe benefits.

 

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