Government changes to Living Away from Home Allowance

The Federal Government has received criticism to reforms made to the Living Away from Home Allowance (LAFHA) announced in the 2012/2013 federal budget.

The changes are tightening the controls of the allowance through workers having to demonstrate that they “maintain a home for their own use in Australia that they are living away from ... for work” in addition to meeting new eligibility criteria.

Many businesses are outraged by the changes that will have a considerable impact to attracting and retaining skilled foreign labour as well as being counter intuitive to the Government’s own initiatives to address the issue of skills shortages.

Deloitte partner and National Immigration Leader Mark Wright questioned the logic of the removal of what he considered “one of the few tax benefits available to the business community to attract and retain talent to Australia.”

He further labelled the decision as “nonsensical” based on its isolation from the related immigration policy measures.

Other changes to the allowance include a restriction on accessibility to a maximum of 12 months for any particular work location, and the requirement for the individuals to substantiate their actual expenditure on accommodation and food beyond a statutory amount.

The reforms will apply from July 1 2012 but will not apply to existing LAFHA arrangements until July 1 2014.

Version 1.0 | 15/05/2012