New Changes are being introduced to Living Away from Home (LAFHA) which happens to be a part of the Mid –year Economic and Fiscal Outlook 2011-12. LAFHA is given as an allowance for those personnel who are staying away from home.
The LAFHA covers three aspects of living:
The LAFHA boosts the take away home salary of the employee. It is definitely a boon to working people as the cost of living goes up from time to time.
From July 1st
2012 onwards the LAFHA will be allowed to be claimed by those who already have their own home for use in their domicile country Australia. As of now these allowances cannot be taxed and do not come under the Fringe Benefit Tax. Under the present fiscal reforms those without any home of their own, food and accommodation will be included in the assessable allowance provided for the employee. The employee will have to pay taxes for this allowance and would have to withhold the tax from these paid allowances. This would mean a reduction in their take home salary.
Under the present LAFHA scheme, nearly 457 holders are claiming LAFHA on criteria that they are based actually overseas but are on temporary stay in Australia
This decision has been taken by the Australian Government keeping in view that many are taking advantage of the tax benefit under the living-away from home allowances and benefits.