A living-away-from-home allowance or benefit arises when your employer pays you an
allowance or provides a direct benefit such as paid accommodation while you are living away from home.
The aim of the allowance or benefit is to compensate you for additional expenses and other disadvantages suffered because your duties of employment require you to live away from your normal residence.
What you need to do
If you are in a new or materially changed employment arrangement after 7:30pm (EST) on 8 May 2012 (see Transitional rules: http://www.ato.gov.au/individuals/content.aspx?menuid=0&doc=/content/00333793.htm&page=9#P104_10679), and you receive a LAFHA or benefit from your employer, you may need to provide declarations to your employer or keep records of your expenses if you come within any of the following circumstances.
Maintaining a home in Australia that you are required to live away from
If you maintain a home in Australia that your duties of employment require you to live away from, your employer can only receive the concessional treatment for any LAFHA they pay you for12 months. After 12 months your employer will have to pay Fringe Benefits Tax (FBT) on any LAFHA they pay you or benefits they give you.
You need to:
1) provide a declaration to your employer about living away from home
2) ensure that you keep records of your expenses and provide evidence of this, or provide adeclaration setting out information about the expenditure to your employer.
Fly-in fly-out or drive-in drive-out
If you work on a fly-in fly-out or drive-in drive-out basis, you are not required to maintain a home in Australia and the 12-month period does not apply.
You need to:
1) provide a declaration to your employer about living away from home
2) keep records of your expenses and provide evidence of this, or a declaration setting out information about the expenditure to your employer.
Don"t maintain a home in Australia and not working on a fly-in fly-out or drive-in drive out basis
If you are an employee who does not maintain a home in Australia and does not work on a fly-in fly-out or drive-in drive-out basis then:
1) your employer does not receive concessional treatment on any LAFHA they pay you or benefits they give you
2) the LAFHA or benefit may be a reportable fringe benefit amount on your payment summary
Amounts that are reportable fringe benefits are used to determine your entitlement to certain income-tested tax concessions and liability for income-tested obligations for the year.
For more information on how reportable fringe benefits affect you, refer to Reportable fringe benefits "" facts for employees(http://www.ato.gov.au/individuals/content.aspx?menuid=43246&doc=/content/68.htm&page=10&H10).
A LAFHA paid to you will still be income tax-free and should not be included as assessable income in your tax return.
To find more information "" http://www.ato.gov.au/individuals/content.aspx?menuid=0&doc=/content/00333793.htm&page=3&H3