Yesterday I was reminded of my slackness in posting so here we go…
Expenses for living at a location are usually not deductible. However, expenses incurred on accommodation and food and drink are usually deductible, or otherwise deductible, where an employee is working away from home for short periods of time. In these situations, an employee is generally travelling on work.
In the above Ruling the Commissioner gives us some guidance of when we are living away from home (no deductions for the employee but may be able to pay a FBT-free LAFH allowance) and when we are travelling (deductions).
The summary… 21 days but no more than 90 in an FBT year.
The Commissioner will accept an employee is traveling for work if:
- provides an allowance to an employee or pays or reimburses accommodation and food and drink expenses for the employee
- does not provide the reimbursement or payment as part of a salary-packaging arrangement and the employee is not given the option to elect to receive additional remuneration in lieu
- includes the travel allowance on the employee’s payment summary or income statement and withholds tax, where appropriate, and
- obtains and retains the relevant documentation to substantiate the fact that all of these circumstances are met
- is away from their normal residence for work purposes
- does not work on a fly-in fly-out or drive-in drive-out basis
- is away at the same work location for no more than 21 calendar days at a time continuously
- is away at the same work location for no more than 90 calendar days in total in an FBT year, and
- must return to their normal residence as soon as practicable when their period away ends.
Example 1 – allowance is not a LAFHA benefit
15. From time to time, Kate is also required to spend between one and three weeks (no more than 21 calendar days) working in various remote locations of Employer Co in Western Australia (WA). Kate will sometimes add a privately-funded weekend on to her trip. She returns to her home in Perth for periods of more than a week before her next trip.
16. When this occurs, Employer Co pays Kate an allowance which she spends on accommodation and food and drink while she is away. Kate is away for a period of no more than 90 calendar days in total in the same location in WA in the FBT year.
18. Employer Co is able to rely on this Guideline as the requirements in paragraph 12 of this Guideline are met, that is, the Commissioner would accept that Kate is travelling on work. Employer Co is paying Kate a travel allowance and not a LAFHA, and Employer Co is not liable for FBT on the allowance paid.