19 September 2012

Reforms to living-away-from-home allowances and benefits passed by the Parliament

The Government welcomes the passage today of the Tax Laws Amendment (2012 Measures No. 4) Bill 2012 through the Senate.

The Bill amends the tax laws to better target the tax concession for living-away-from-home (LAFH) allowances and benefits to people who are legitimately maintaining a home in Australia away from their actual home for an initial period.

"Our reforms to the tax concession for LAFH allowances and benefits will ensure that this 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 that they are living away from for work purposes, for up to 12 months."

These reforms will provide savings of $1.9 billion over the forward estimates. They make up part of over $130 billion in savings that have been delivered since the Government came to office.

The Government has a proven track record of finding savings to fund Labor priorities like the biggest ever increase in the pension, the Paid Parental Leave scheme, and mental health reform.

These savings include:

  • Means testing the Private Health Insurance rebate to ensure a fairer and more sustainable health system (over $3 billion);
  • Targeting family payments to those in need, by means testing Family Tax Benefit Part B and the Baby Bonus ($900 million);
  • Reducing the tax concession which very high income earners receive on their superannuation contributions, so it's more in line with the concession received by average income earners (over $900 million); and
  • Gradually lifting the Age Pension age to make it more sustainable and target it where it is needed most.

These responsible savings will see projected government spending fall to 23.5 per cent of GDP in 2012-13 and remain around this level across the forward estimates. This would be the longest sustained run of payments below 24 per cent of GDP since the early 1980s.

The Government's responsible savings are in sharp contrast to the approach of the Coalition, who have been ticking off on savage job cuts right up and down the eastern seaboard.