Tax Changes to Living-away-from-home Allowances and Benefits Introduced into Parliament
A Bill introduced into the Parliament today will implement a range of improvements to Australia's tax laws, including those relating to living-away-from-home (LAFH) allowances and benefits, said Assistant Treasurer David Bradbury.
The Tax Laws Amendment (2012 Measures No. 4) Bill 2012 will reform the tax concession for LAFH allowances and benefits, clarify GST rules relating to incapacitated entities, and ensure that interest and penalties are not payable on changes as a result of recent amendments to the Consolidation regime.
The Bill will implement the two reforms to the tax concession for LAFH allowances and benefits that were announced as part of last year's Mid-Year Economic and Fiscal Outlook, and also the two reforms that were announced in this year's Budget.
"These reforms will better target the tax concession for LAFH allowances and benefits to people who are legitimately maintaining a home away from their actual home in Australia for an initial period," said Mr Bradbury.
The Government announced the following two reforms on 29 November 2011 as part of the Mid-Year Economic and Fiscal Outlook, and said on announcement that they would apply from 1 July 2012:
- Temporary residents will need to be maintaining a home for their own use in Australia that they are required to live away from for work, to be able to access the tax concession; and
- All individuals will need to substantiate their actual expenditure on accommodation and food.
The Government announced two additional reforms to the tax concession in this year's Budget on 8 May 2012, and said on announcement that they would apply from 1 July 2012 for arrangements entered into after Budget night, and from 1 July 2014 for arrangements entered into prior to that time:
- Permanent residents will need to be maintaining a home for their own use in Australia that they are required to live away from for work, to be able to access the tax concession; and
- There will be a 12-month time limit on how long all individuals (other than fly-in fly-out workers) can access the tax concession.
These reforms will not affect:
- the tax concession for fly-in fly-out arrangements, as 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.
The Government has held two extensive consultation processes in relation to these reforms.
In response to the submissions received, the Government has taken the decision to defer the start date of the reforms from 1July 2012 to 1 October 2012.
"This deferral will give employers and employees more time to prepare for the new arrangements," said Mr Bradbury.
In addition, a number of technical changes have been made to the amendments in response to feedback on the exposure draft of the legislation.
"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 Mr Bradbury.
"The tax concession will continue to support people who are bearing additional costs because they have to maintain a home away from their actual home in Australia for work purposes, for up to 12 months."
28 June 2012