FEDERAL BUDGET REVIEW

FEDERAL BUDGET REVIEW

The changes announced to the application of Living Away from Home Allowance (LAFHA) didn’t come as any real surprise as Government leaks foreshadowed these changes as early as February 2012.

Fringe Benefit Tax Changes
  • Foreign worker access to LAFHA discontinued.
  • Domestic employee LAFHA payment period ‘capped’ at 1 year.
  • Existing LAFHA arrangements remain in force – to be transitioned out by 01 July 2014
  • Benefits for FIFO, camp & oil rig lodging, remote area and relocation allowances are not affected

 

Policy Changes & Comments

LAFHA Benefit Period ‘capped’ at 1 year:Previously there was no legislated timeframe set although convention maintained a 2 – 3 year timeframe on the offering;

Employees required to maintain a residence at their original location:This is the re-introduction of an original requirement stating that the employee is to maintain a residence and intend (but not required) to return.

All Expenditure to be substantiated:Rental Agreements substantiating cost of accommodation must be kept by employers (this is already standard practice) and; Any and all expenditure on Food over and above the Statutory Food Rate provided by ATO and indexed annually, will need to be substantiated. Again, it is current Reditus Policy to only allow the Statutory Food Amount in salary packaging arrangements.

Transition Period: 01 July 2014:All LAFHA arrangements in place prior to 7:30pm, Tuesday 08 May 2012 can remain in place, however they must be transitioned out by 01 July 2014.

 

What does this mean for employers?

  • Employers should revisit car policies, and implement a communication strategy for employees about the continued changes.
  • The phasing-in arrangements – particularly the 10 May 2011 start date impacting the current 2012-13 FBT year – mean that an employer’s FBT calculations and record-keeping will be more complex throughout the transitional period.
  • Car salary packaging arrangements will need to be revisited to understand the implications on the employee’s total remuneration. Post-tax contribution strategies, where applicable, will need to be updated.

 

What does this mean for employees?

  • Car salary packaging arrangements will need to be revisited to understand the implications on the employee’s total remuneration. Post-tax contribution strategies, where applicable, will need to be updated.

 

Reditus Group

Reditus is an innovative financial services firm specialising in delivering significant cost savings to organisations and to your employees. We do this through the effective use of the Fringe Benefits Tax legislation and Salary Packaging. The result for you is a partner in your business, who will work with your managers and employees in providing an employee benefits scheme that will entice new employees and maintain your current group of valued employees.

If you would like assistance or strategic advice on LAFHA for employees or any other Fringe Benefits Tax related items, please contact Timothy Vlug at Reditus Group on 07-3054 1000 or timothy.vlug@reditus.com.au

Post a Reply