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The proposed changes to the Living Away From Home Allowance
(LAFHA) have finally received Royal Assent on 28 September 2012.
The changes became effective 1 October 2012.
As a transitional rule, the reasonable food amounts contained in
TD 2012/5 can continued to be utilised until 31 March 2013.
The Australian Taxation Office (ATO) in the meantime, has
released draft Taxation Determination TD 2012/D8 proposing the
reasonable LAFHA food amounts to be used for the period 1 April
2013 to 31 March 2014.
Reasonable LAFHA food component for 2014 FBT year –
TD 2012/D8
From 1 April 2013, the ATO has proposed in TD 2012/D8 to
separate the reasonable food amounts for which substantiation is
not required into three tiers, based on the salary levels of the
employee.
Further, distinction has been made with respect to the maximum
reasonable food amount available to an eligible employee for
locations within Australia and overseas.
The proposed reasonable food amounts for locations within
Australia for 1 adult are as follows:
If an employee is accompanied by other family members, the
reasonable food amount per week is determined by multiplying the
amount shown in the above table by the relevant factor in the table
below.
For larger family groups, the reasonable food amounts for each
additional adult and each additional child are calculated at an
additional 60% and 30% of the single adult rate respectively.
Similar to the previous rules, a person who is 12 years or older
at the start of the relevant FBT year is treated as being an adult
for the purposes of ascertaining the reasonable food amounts under
this draft Determination. Details on this Determination can be
found
here.
Issues arising from the draft Taxation Determination
Some of the issues identified from TD 2012/D8 include:
Additional complexity as reasonable food component is dependent
upon salary level;
No definition of salary – and there is no guidance on
whether the term salary refers to cash or total remuneration;
and
Disadvantages the lower-paid employees as it is more likely
that they will be required to substantiate for the food costs
incurred, especially where they are located at a high-cost
locations
Is the new LAFHA world becoming simpler?
During the consultation process, the Federal Government has
maintained that reforms to the LAFHA rules were intended to make
the administration of LAFHA simpler and fairer for all. Consider
the following example published in TD 2012/D8:
Jasper, his wife and their two children (both under 12 years
of age) relocate to Brisbane from Sydney for a period of 5 months
(from 1 May 2013 to 30 September 2013; 21 weeks and 6 days) for
Jasper to work on a project for his employer. Jasper receives a
LAFHA from his employer. His salary for the 2013-14 year is
$120,000.
Jasper does not need to substantiate his family's food and
drink expenses during the 5 month period if his total expenses do
not exceed $8,350 ($382 per week multiplied by 21 6/7 weeks). The
weekly amount of $382 is calculated by taking the rate from table 1
($212) and multiplying that by a factor of 1.8 (factor for 2 adults
and 2 children from table 2).
If Jasper's family's total food and drink expenses for the
period exceed $8,350, Jasper will have to substantiate all of the
expenses incurred.
Does the new LAFHA world appear simpler? You can be the
judge.
Invitations to comment
The ATO has invited comments on TD 2012/D8. Submissions are due
26 October 2012.
