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Australian Living Away from Home Allowance

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  • Australian Living Away from Home Allowance Overview

    The Australian living away from home allowance is basically a fringe benefit for employers who pay an allowance to employees that temporarily have to work away from home.  These payments are viewed in a different way than a normal salary by the ATO, so it has many advantages over simply increasing the salary of an employee.  However, it is a fairly complicated process because there are multiple definitions involved.  In other words, there are very specific rules about who can and can’t qualify for this.  Additionally, it requires action to be taken by both the employer and the employee, so the actual procedure can be confusing.

    The good news is that our experts at The Migration Place can help you with this!  We have helped many companies manage the movement of employees, both within Australia and to positions overseas.  We can analyze the situation to make sure you’re doing everything correctly, find out if you could be doing something more beneficial for you, or just help you set up the process of an Australian living away from home allowance.

    Benefits of Australian Living Away from Home Allowance

    The living away from home allowance is given to the employee as a way to make a faraway work period more bearable.  Therefore, it’s beneficial to them because it’s basically an extra bit of salary on which they don’t have to pay the normal taxes.

    There are multiple benefits to an employer, but some are less direct than others.  The biggest advantage is that it makes it easier to convince a current employee to do some temporary work away from their home, and you don’t have to go through the challenges and difficulties of finding and hiring someone new.

    Requirements of Australian Living Away from Home Allowance

    There are some fairly strict requirements that need to be fulfilled before appropriately going through with a living away from home allowance.  First, the employee receiving the allowance must have a home in Australia where he or she usually lives.  This is a complex area because there are many different factors that come into play.  For example, it helps prove a normal home residence if other family members live there and all official registrations are listed at that address.  But, it can become very hard to determine in other cases, such as if the usual residence has been rented out to others while the employee is away.

    Also, to receive the tax benefits of the Australian living away from home allowance, the employee must give their employer a formal declaration about their situation of living away from home.  There are many other requirements, including length of time allowed for this arrangement, but it’s best to speak with a legal expert about your situation to see if all requirements can be met.

    12 Month Rule for Australian Living Away from Home Allowance

    In order of the fringe benefits to be allowed with the living away from home allowance, it’s important that the employee must only be in the new location for a temporary period of time.  The general rule is that they have to remain there for less than a year.

    Qualifying for Australian Living Away from Home Allowance

    The living away from home allowance is designed for Australian taxpayers, but they generally fall into one of two categories.  The first is Australian residents who are temporarily moving to other parts of Australia for their job.  The second are Australian taxpayers who have to move abroad for a short time period.

    Different from Travelling Allowance

    A living away from home allowance is, in fact, different from a normal travel allowance given to employees.  However, they can both be given to workers for short-term travels for work purposes.  It’s critical that these two are not mistakenly used in the wrong circumstances.

    Assistance with Australian Living Away from Home Allowance

    As you can see, this isn’t a very simple topic.  It’s a very complicated subject with many ambiguous legal definitions involved.  Also, the fact that it requires input from employer and employee makes it more difficult to complete.  Even more, because of involvement with tax payments, mistakes can have serious consequences.  Overall, working with a lawyer will ensure that you’re doing everything correctly and legally, and that the company and the employee will receive the greatest possible benefit.

    To learn more about the Australian living away from home allowance, contact The Migration Place today.