At Bookssorted Contractor Payroll Management, we’re asked a lot about Living Away from Home Allowance (better known as LAFHA), which is an allowance available for contractors who need to live away from their usual place of residence for work.
To help you understand this allowance our payroll management team has provided answers to the most common questions.
In official speak, the Australian Tax Office defines LAFHA as
an approved allowance designed 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”.
What does that actually mean?
It means that you can reduce your taxable income by claiming costs such as;
You can claim the allowance if you are required to live away from your normal residence, to perform your duties of employment.
If you have entered into an employment contract and you will be away from your normal residence, you can claim this allowance.
As expected, however, there are some rules and conditions that you must meet to claim LAFHA
The main condition is that you maintain your usual residence and have it available for use at all times, while you are away. This means you cannot rent out your normal residence when you are claiming LAFHA.
Also, you can only claim LAFHA for a maximum period of 12 months.
You can claim the majority of costs incurred, as you would not have had these costs if you weren’t required to work away from home.
This means you can claim your initial travel expenses to your new location, and you can also claim the cost of temporary accommodation at your new location, if you need time to find suitable longer-term accommodation.
Connection of utilities, such as gas and electricity, are also claimable. So be sure to keep receipts and tell us when you’re moving so we, as your payroll company, can help you claim.
If you think you qualify for LAFHA, call us on 02 6161 8580 or email firstname.lastname@example.org and we can chat with you more about LAFHA and help you with the claim process.
Bookssorted operates in Sydney, Melbourne and Canberra and we’re here to help! We are a payroll service company that has been in the industry for more than a decade, so we’re big enough to manage all your contractor payroll needs, yet small enough to know your name when you call! If you’re not with a payroll management company, or your payroll service isn’t providing you the quality service you need, chat with us and join the Bookssorted family.