Chapter 11 - Living-away-from-home allowance fringe benefitsRelying on this GuideWe are committed to providing you with accurate, consistent and clear information to help you understand your rights and entitlements and your obligations. Show
If you follow our information and it turns out to be incorrect, or it is misleading and you make a mistake as a result, we will take that into account when determining what action, if any, we should take. Some of the information on this Guide applies to a specific financial year. This is clearly marked. Make sure you have the information for the right year before making decisions based on that information. Unlike most other types of fringe benefits, a living-away-from-home allowance fringe benefit can only be provided by the employer to the employee. The information provided relates to the application of the FBT law to living-away-from-home allowance (LAFHA) fringe benefits as at 1 October 2012. For information about the application of the FBT law to such fringe benefits provided because the employee was living away from home (LAFH) before 1 October 2012, see Living-away-from-home-allowances - before 1 October 2012 . 11.1 OverviewFor FBT purposes, LAFHA is an allowance you (the employer) pay to your employee to compensate for additional expenses incurred and any disadvantages suffered because the employee's duties of employment require them to live away from their normal residence. Instead of paying a cash LAFHA to an employee, you could provide other fringe benefits, either by:
11.2 What is a living-away-from-home allowance fringe benefit?The payment of a LAFHA is a fringe benefit. For FBT purposes, a LAFHA is an allowance you (the employer) pay to an employee to compensate for additional expenses incurred and any disadvantages suffered because the employee's duties of employment require them to live away from their normal residence. The term 'additional expenses' does not include expenses the employee would be entitled to claim as an income tax deduction. For a payment to an employee to be considered a LAFHA, there are three conditions that must be met:
Duties of employment require your employee to live away from their normal residenceA LAFHA exists where some or all of the allowance is compensation to the employee for accommodation and additional living expenses that the employee might be expected to incur because the duties of the employee's employment require them to live away from their normal residence. Whether an employee's job requires them to live away from their normal residence, and where the employee's normal residence is located, is a question of fact and will depend on each employee's circumstances. Normal residence'Normal residence' is a broad term that means a LAFHA fringe benefit can arise regardless of the location of an employee's usual place of residence. While an employee's usual place of residence may be in Australia or outside Australia, it is their normal residence that will be relevant for determining whether there is a LAFHA fringe benefit. Place of residence scenarios
Example - employee's usual place of residence is outside Australia and normal residence is Australian residenceFiona, a British citizen, comes to Australia to work for three years. She intends to return to the United Kingdom at the end of the period. Her usual place of residence is in the United Kingdom. Fiona takes out a lease and rents a home in Sydney for the duration of her employment in Australia. After Fiona has been in Australia for six months, her employer asks her to work in the Melbourne office for six months. During the six-month period in which she will be working in the Melbourne office, Fiona is paid an allowance to cover her Melbourne food, drink and accommodation expenses. For the purposes of determining whether the allowance is a LAFHA fringe benefit, the home in Sydney is considered to be her normal residence because it is the place in Australia where Fiona usually resides when in Australia. Example - employee's normal residence is usual place of residence and is outside AustraliaHarry, a British citizen, comes to Australia to work for three years. He intends to return to the United Kingdom at the end of the period. His usual place of residence is in the United Kingdom. Harry takes out a lease and rents a home in Sydney for the duration of his employment in Australia. After Harry has been in Australia for a few weeks, his employer asks him to work in the Melbourne office for the remainder of his time in Australia. During the period in which he will be working in the Melbourne office, Harry is paid an allowance to cover his Melbourne food, drink and accommodation expenses. Even though Harry has taken out a lease of the Sydney home for three years, Sydney would not be considered to be his normal residence in Australia because he had lived there only briefly - that is, Sydney could not be considered the place in Australia where Harry usually resides while in Australia. His normal residence in this case would be his usual place of residence in the United Kingdom. Usual place of residenceAn employee's place of residence is the place at which they reside or have some form of sleeping accommodation, regardless of whether on a permanent or temporary basis, or on a shared basis. However, the question of whether an employee is living away from their usual place of residence involves a consideration of two places of residence - the place where the employee is living at the time, and some other place. An employee is regarded as living away from their usual place of residence if they would have continued to live at the former place had the duties of their employment not required them to work temporarily in the new locality. Example - former home continues to be usual place of residenceAn employee is transferred by his employer from Sydney to Newcastle to help install a new item of plant. For the duration of this appointment, the employee's immediate family continues to live at his former address, where he returns every weekend. Example - former home has ceased to be usual place of residenceAn employee is transferred by his employer from Sydney to Newcastle. Just before the transfer, the employee separated from his wife, who continues to reside at the former address with the employee's children. Apart from irregular visits to see the children, the employee will not be returning to his former residence. Practical guidelines for determining whether living away from homeThe principles of determining whether an employee is living away from their usual place of residence have been established over the years by case law decisions. Whether or not an employee is living away from home will depend on the facts of each case. Similar principles can apply to determine if an employee is living away from their normal residence. Factors such as the lifestyle of the employee and the type of profession and industry often need to be taken into consideration. Other relevant factors may include whether personal details, such as the employee's driver's licence or electoral enrolment, have been changed; whether the former house was being looked after by relatives or friends for the time the employee was at the new locality; or whether the former residence was being rented out for the time they were at the new locality. These may also affect the calculation of the taxable value of any LAFHA fringe benefit. Some employees do not have a fixed usual place of residence because of the transitory nature of their lifestyle, which means that their normal residence is wherever they happen to sleep at night. An example would be employees who follow a job from construction site to construction site and have no permanent place of residence - these employees will not generally be regarded as living away from home. Examples of employees on appointments of finite duration who will generally be living away from their usual places of residence are foreign nationals employed in Australia (expatriate employees) and Australian residents stationed in foreign countries for a time - for example, export consultants, diplomats and immigration officials. The same applies where an employee transfers to a new locality within Australia on an appointment of fixed duration, provided the permanent job location does not change. An example would be an arrangement where an employee transfers to a branch office of the employer in another state for a two-year or three-year term on the basis that they will return to the permanent position at the end of that time. The employee would be regarded as living away from their normal residence provided that they intend to return there at the end of the term of the transfer. The general presumption is that a person's normal residence will be close to where they are permanently employed. Generally, employees in the following kinds of situations would be regarded as living away from their normal residence:
Employees who work on an oil rig, or other petroleum or gas installation at sea, are generally provided with residential accommodation at or near the worksite. An allowance you pay in such circumstances to compensate employees for disadvantages suffered because their duties of employment require them to live away from their usual place of residence is a LAFHA for FBT purposes, provided the allowance is expressly stated to be a LAFHA. For these employees, they do not need to have a usual place of residence in Australia. For further information about the difference between a travelling allowance and a LAFHA, see section 11.11 . 11.3 Steps to take if you want to pay your employee a LAFHAIf you pay your employee a LAFHA, you need to do the following:
If you are not paying a cash LAFHA to your employee, but rather are providing accommodation or food or drink, or reimbursing them for these expenses, see section 11.12 . 11.4 Taxable valueThe taxable value of the LAFHA fringe benefit depends on the circumstances of the employee. The calculation of the taxable value falls into three circumstances:
Taxable value of the LAFHA fringe benefit
The taxable value is not reduced by any exempt food component to the extent the fringe benefit relates to a period during which the employee resumes living at his or her normal residence. This means that if you pay an allowance for food or drink during any days that the employee returns home, the allowance that relates to those days is fully taxable for FBT purposes. 11.5 Exempt accommodation componentThe accommodation component is the amount of the LAFHA fringe benefit that it is reasonable to conclude is compensation for expenses to be incurred by the employee for accommodation while the employee is living away from home. The accommodation expenses are for both the employee and any eligible family members, such as the employee's spouse and children. The exempt accommodation component is so much of the accommodation component that equals the accommodation expenses actually incurred by the employee. Where a family member incurs these expenses on behalf of the employee, that family member is considered to be acting as an agent of the employee and, therefore, the employee is still the person incurring those expenses. The employee must substantiate all accommodation expenses. If an employee does not spend all of the LAFHA provided in respect of the accommodation component, the excess is not an exempt accommodation component and is taxable. ExampleSteve receives a LAFHA from his employer which includes an accommodation component of $450 while he is seconded to Perth for 12 months. His normal residence is in Melbourne, and his Melbourne home continues to be available for his immediate use during his secondment. Steve resides with his wife, Helen, who rents a house in Perth for 12 months at a cost of $450 per week. The exempt accommodation component in this case is $450, provided the substantiation requirements are met. ExampleSteve and his wife Helen both work for the same employer and receive a LAFHA. Each LAFHA includes an accommodation component of $450 while they are seconded to Perth for 12 months. Steve and Helen's normal residence is in Melbourne, and their Melbourne home continues to be available for their immediate use during their secondment. Steve and Helen rent a house together in Perth at a cost of $450 per week. Steve and Helen's separate exempt accommodation components in this case are $225 each per week, provided the substantiation requirements are met. As Steve and Helen are each receiving an accommodation component of $450 per week, but are only spending $225 each per week, the excess of $225 each per week ($450 - $225) is not an exempt accommodation component. This excess of $225 each per week will form part of the taxable value of their respective LAFHA fringe benefits. 11.6 Exempt food componentThe steps for calculating the exempt food component are outlined below:
Where a family member incurs these expenses on behalf of the employee, that family member is considered to be acting as an agent of the employee and, therefore, the employee is still the person incurring those expenses. The exempt food component does not include food expenses relating to any days during which the employee resumes living at his or her normal residence - this means that if you pay an allowance for food or drink for any days that the employee returns home, that part of the allowance for those days is fully taxable. Food componentThe food component in relation to a LAFHA fringe benefit is so much that might reasonably be concluded is compensation for expenses to be incurred by the employee for food or drink while the employee is living away from home. The expenses are for food or drink for both the employee and any eligible family members. Applicable statutory food totalThe applicable statutory food total is:
less (minus)
The applicable statutory food total cannot be below zero. The statutory food amount is $42 a week for each adult, and $21 a week for each child. (For this purpose, an adult is a person who had attained the age of 12 years before the beginning of the FBT year.) The applicable statutory food total calculation reflects two alternative practices:
Example - allowance includes compensation for additional food costsAn employee living away from their normal residence is paid a LAFHA of $933 per week. Of that allowance:
In this example, the allowance includes compensation for additional food costs. The employer calculated the $233 food component by deducting $42 (estimated normal home food consumption costs) from the estimated food costs of $275. The taxable value is calculated as follows, because the substantiation requirements are met:
Because the food allowance is only for additional food costs, the exempt food component is $233. This amount is not required to be substantiated because it does not exceed the Commissioner's reasonable amount for food and drink expenditure. Example - allowance includes compensation for total food costsAn employee living away from their normal residence is paid a LAFHA of $900. Of that allowance:
The taxable value is calculated as follows, because the substantiation requirements are met:
The taxable value is $80 paid for disadvantages suffered for living away from home plus $60 food component that was not spent equals $140. The $60 consists of the $42 statutory food amount plus the remaining $18 difference between the $278 - $260. Commissioner's reasonable food amountThe Commissioner will issue an annual taxation determination specifying the reasonable amount for food and drink expenses for future years. The Commissioner determines a reasonable amount for food and drink expenses incurred by the employee for which substantiation is not required. An employee is required to substantiate all the expenses incurred on food and drink if the total of those expenses incurred exceeds the amount the Commissioner considers reasonable. However, while the Commissioner will determine the amounts that are considered reasonable for the purposes of alleviating the requirement for an employee to substantiate expenses incurred on food and drink, the Commissioner does not determine if a LAFHA paid to an employee is reasonable or not. The amount paid as a LAFHA is a matter to be determined between you and your employee, having regard to appropriate matters, such as any industrial laws or requirements. Expenditure equal to or less than the Commissioner's reasonable food amountWhere the employee incurs expenditure on food or drink that is equal to or less than the Commissioner's reasonable food amount, no substantiation of the food or drink expenditure is required. Before paying a LAFHA which consists of a food component, you must be able to conclude that an employee will incur expenditure on food or drink. As a result, it is reasonable for you to be satisfied that there has been expenditure on food or drink up to the Commissioner's reasonable amount. This means that the Commissioner accepts that the employee has spent an amount equal to the lesser of either:
The effect of paying an allowance where the employee's expenditure is equal to or less than the Commissioner's reasonable food amount is outlined in the table below.
See also:
Example - allowance includes compensation for additional food costs and expenditure is less than Commissioner's reasonable food amountAn employee living away from their normal residence is paid a LAFHA of $630 per week. Of that allowance:
The taxable value is calculated as follows, assuming the substantiation requirements for the accommodation component is met:
Because the food component paid is $200, which is less than the Commissioner's reasonable food amount, the full amount of the food component is accepted as having been spent. The taxable value is $80 paid for disadvantages suffered for living away from home. Example - allowance includes compensation for total food costs and expenditure is less than Commissioner's reasonable food amountAn employee living away from their normal residence is paid a LAFHA of $730 per week. Of that allowance:
The taxable value is calculated as follows, because the substantiation requirements for the accommodation component are met and where the Commissioner's reasonable food amount is $233:
Because there is no substantiation required because the amount spent by the employee is less than the Commissioner's reasonable food amount, the exempt food component is accepted as being the Commissioner's reasonable food amount of $233. The taxable value is:
11.7 Employee maintains a home in AustraliaAn employee's home in Australia (the place in Australia where they usually reside) can be a unit of accommodation as defined in the FBT legislation. This definition is broad and includes a house, flat, home unit, caravan or accommodation in living quarters. To maintain a home in Australia, all of the following must apply:
Ownership interestOwnership interest includes both a legal or equitable interest, and a licence or right to occupy a dwelling. An employee or their spouse can have an ownership interest in a home they own or rent. An adult child living with their parents generally does not have an ownership interest in the home and, therefore, is not maintaining a home as required, because they are not usually responsible for the mortgage or rental payments. Any payment of board would not change this position because the payment of board is considered to be a domestic arrangement. Immediate use and enjoymentFor the employee to maintain a home for their immediate use and enjoyment at all times, the entire home cannot be rented out or sublet while they are living away from it. The employee must incur the ongoing costs of maintaining the residence, such as mortgage or rental payments and rates. The employee must be able to return to the home at any time and take up immediate occupancy. Boarders, tenants or house-sittersIf an employee has a boarder or tenant staying with them in their normal residence, the employee can still be considered to be maintaining the home for their own use and enjoyment. However, the boarder's or tenant's stay must not impinge on the availability of the residence for the individual's immediate use and enjoyment. Likewise, if an employee has a house-sitter in their home while they are living away from it, they will be maintaining the home when the house-sitter is either:
Similarly, if an employee decides to rent or sublet a part of their home while they are living away from it, such as a bedroom or granny flat, they will be maintaining a home for their own use and enjoyment if the employee continues to have occupancy rights and the rental or sublet does not restrict the employee's use and enjoyment of the property when the employee returns home. 11.8 First 12 months employee is required to live away from homeThe fringe benefit has to relate to all or part of the first 12 months that an employee is living away from home in Australia for the purposes of their employment. The 12 months do not have to be consecutive. You can choose to pause the 12-month period - for example, you may choose to pause the period because the employee is taking leave, such as annual leave, long service leave or sick leave. This gives you the flexibility to pause the period when circumstances arise in which it is appropriate and beneficial to do so. The table below outlines how the 12-month period is affected by various employment situations.
ExampleJess receives a LAFHA from her employer while she is seconded to Brisbane for 12 months. Her normal place of residence is in Canberra. She is living in a serviced apartment in Brisbane. Part of the way through the secondment, Jess takes a month's leave. Her employer wants her to complete a full 12-month secondment in Brisbane and pauses the 12-month period while she is on leave. During the paused period, Jess does not lease the serviced apartment in Brisbane and her employer does not pay her a LAFHA. When Jess resumes her secondment in Brisbane, the employer again pays her a LAFHA and the 12-month period recommences. Had Jess continued to lease the serviced apartment during the pause in the 12-month period, and Jess's employer continued to pay her a LAFHA during this time, Jess's employer would not have been able to reduce the taxable value of the LAFHA by the amount of the allowance paid for the period of leave. ExampleFrank lives and works in Canberra. His employer asks him to work in Sydney for a period of nine months, for which a LAFHA will be paid. After that period of employment in Sydney, Frank returns to Canberra. The LAFHA fringe benefit provided to Frank for the nine months relates to part of the first 12 months that Frank is living away from his Australian home. At a later time, Frank's employer asks him to work in Melbourne for a number of months. Because this is a new work location, a new 12-month period starts for any LAFHA paid to Frank during his time working in Melbourne. ExampleJames is living away from home and is paid a LAFHA by his employer. James's employer undergoes a corporate restructure. James is transferred to a separate entity, which is not an associate of the employer, and works in the same work location. A new 12-month period commences for the new employer in James's case. ExampleStephen is paid a LAFHA by his employer, a state government department, for living away from home. His employer transfers him to work, in the same location, for a state-owned corporation that is an associate of the department. The 12-month period continues and a new 12-month period does not commence in this case. ExampleRuth lives and works in Brisbane. For three months of the year, her job requires her to live away from her normal residence and work in Canberra. She returns to her normal residence in Brisbane for the remainder of the year. This arrangement continues for five years, during which time there is no change to Ruth's employer, work location and duties. In this case, the LAFHA paid by Ruth's employer is taxed concessionally in each of the first four years. In each of those years, only three months of the first 12 months are used. In the last year, the value of the fringe benefit is not reduced by any exempt accommodation or exempt food component because the benefit does not relate to all or part of the first 12 months that Ruth is living away from home while working at that same location. 11.9 Fly-in fly-out and drive-in drive-out employeesThe employee is considered to be working on a fly-in fly-out or drive-in drive-out (or equivalent) basis when all of the following apply:
ExampleAn employee works in the mining industry on a 7-day on, 7-day off roster. The employee works Sunday through to Saturday, and has the following Sunday through to Saturday off. In this case, the employee is not working the same days in consecutive weeks because the employee is working every day in one week, then not working in the next, and is doing this on a rotational basis. This is contrasted with an employee who works Monday through to Friday and has Saturday and Sunday off, and does the same in the next week. An employee in this instance is working the same days in each week - they are working on a consecutive basis, week after week. 11.10 Record-keeping requirementsEmployee declarationsTo access the concessional treatment for LAFHAs and benefits, your employee will need to give you a declaration about living away from home. The declaration must be in the approved form and will vary depending on your employee's situation. Your employee may also give you a declaration to substantiate their exempt accommodation and exempt food expenditure.
You must obtain all employee declarations no later than the day on which your FBT return is due to be lodged with us or, if you don't have to lodge a return, by 21 May. See also:
Exempt accommodation and exempt food componentsTo reduce the taxable value of a LAFHA by any exempt accommodation component and any exempt food component, you must obtain from your employee documentation substantiating the expense, as explained below.
The Commissioner issues an annual Taxation Determination specifying the reasonable food or drink amount. It is the amount of food or drink expenditure incurred by the employee that is relevant for the substantiation requirements, not the amount of the allowance paid. See also:
ExampleFred's employer pays him more than the Commissioner's reasonable amount for food or drink expenses as part of his LAFHA. Fred incurs food or drink expenses to the full extent of the allowance provided. He must substantiate all his food or drink expenses incurred, not just the amount in excess of the Commissioner's reasonable amount. If Fred incurred food or drink expenditure that was less than or equal to the Commissioner's reasonable amount, he would not be required to substantiate his food or drink expenditure - the Commissioner's reasonable amount is taken to be his food or drink expenditure. Timeframes for keeping and receiving records
11.11 Difference between a living-away-from-home allowance and a travelling allowanceIt is important to determine whether an allowance paid by you to your employee is a LAFHA or a travelling allowance, because they have different tax treatments. LAFHAs are a fringe benefit, whereas travelling allowances are part of the employee's assessable income and are not fringe benefits. The following table sets out some of the indicators of whether the allowance is a LAFHA or travelling allowance:
The indicators above are guidelines only and no single indicator determines the nature of the allowance received - for example, a travelling allowance might be paid to a commercial traveller, or travelling entertainer almost continuously, whereas another employee may receive a LAFHA for only a month or so. There may be circumstances when an employee is away from their home base for a brief period in which it may be difficult to determine whether the employee is living away from home or travelling. As a practical general rule, where the period away does not exceed 21 days, the allowance will be treated as a travelling allowance rather than a LAFHA. 11.12 Other living-away-from-home fringe benefitsRather than paying a cash LAFHA while an employee is required to live away from their usual home, you may provide accommodation and/or food for the employee. Alternatively, you may reimburse the employee for these expenses. In these instances, although the benefits must be valued by reference to the valuation rule for the particular type of benefit, the tax liability is essentially the same. The following reduction and exemption may apply in these circumstances:
See also:
© AUSTRALIAN TAXATION OFFICE FOR THE COMMONWEALTH OF AUSTRALIA You are free to copy, adapt, modify, transmit and distribute this material as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products). Do actors have to pay for travel?If shooting is at a studio or within a studio zone, there is no compensation for your commute to work. There is also no payment for expenses incurred while traveling to an audition. But a producer must reimburse you for travel to a work site outside a studio zone. What is a studio zone?
Do actors stay in hotels while filming?One of the most common options for actors while filming, hotels are readily available in many locations and price points. Productions with a large cast and crew may seek out hotels that allow everyone to stay close together, making it easier to transport people to and from set while creating bonding opportunities.
How long do actors stay on set?Filming days can run from twelve to as many as twenty hours. Feature films may involve working 5 days a week and can last up to three months of shooting. Depending on the role, an actor may need to learn new skills or receive training or coaching. This can last several weeks or a few months.
Do actors live in their trailers?So, where do actors stay when filming away from their residence? Mainstream actors resort to plush hotels, spacious apartments, rented houses or villas, or sometimes trailers, whichever is convenient to the actors and the producers. But, there is no specific answer as it depends on several reasons.
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