The Living-Away-From-Home (LAFH) concessions provide tax-free benefits for housing and food costs of employees who are required to live-away-from-home in order to perform employment duties elsewhere. For inbounds to Australia (and outbounds), concessions also apply for children’s education and home leave.
From July 1, 2012, the Government proposes to reform the LAFH rules by (1) move the current LAFH rules in the FBT regime, back to the Income Tax regime with LAFH allowances assessable to employees and a deduction being available for substantiated amounts of housing and food costs; and (2) requiring temporary residents (i.e. foreign nationals) to maintain an Australian home before any concession may be claimed when living-away-from that Australian home.
Clearly the costs of employing foreign nationals in Australia will increase. Temporary residents will be subject to personal taxation on their housing costs, etc. unless they are able to fall within the (unlikely) narrow framework of maintaining an Australian home.
Permanent residents may continue to enjoy the concessions.