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_Locodriver(Newbie)Newbie
2 May 2021

Hello

I am on a "temporary transfer" with work on the other side of the country for 3 months. The company is paying us a $130 daily LAFHA allowance, however this is being taxed in our payment summary, ie the employee (me) is paying the tax, so I am only receiving just over half of the $130 per day, the rest is taxed. Under the agreement, the $130 is comprised of a breakfast, lunch, dinner and incidental amount which all add up to the $130.

Further info, accomodation is paid for, all I have to do is buy my own food.

It was my understanding this $130 per day should be tax free, however the company is required to pay FBT separately from this in their own tax affairs.

I am looking for a clean cut answer here. Is the employee in any way liable to pay income tax on the LAFHA that they receive when paid a pre determined daily amount like this?

Thanks and regards

1,957 views
3 replies
1,957 views
3 replies

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Most helpful reply

CaroATO(Community Support)Community Support
5 May 2021

Hi @Locodriver,

I really appreciate the research you've done.

Check you're not receiving more than the reasonable amount of LAFHA because if you are, you'll need to pay tax on the excess.

Your employer would pay FBT, so, the full allowance would be taxed twice if your employer is including all of it in your taxable income.

When you complete your tax return, you'll list the allowance separately and the overpayment of tax will be taken into consideration when we calculate the amount of tax you'll need to pay for the financial year.

Make sure you've completed the LAFHA declaration so your employer has it recorded.

We've some great information on our website about how to report the allowance on your tax return.

All the best.

All replies

Most helpful reply

CaroATO(Community Support)Community Support
5 May 2021

Hi @Locodriver,

I really appreciate the research you've done.

Check you're not receiving more than the reasonable amount of LAFHA because if you are, you'll need to pay tax on the excess.

Your employer would pay FBT, so, the full allowance would be taxed twice if your employer is including all of it in your taxable income.

When you complete your tax return, you'll list the allowance separately and the overpayment of tax will be taken into consideration when we calculate the amount of tax you'll need to pay for the financial year.

Make sure you've completed the LAFHA declaration so your employer has it recorded.

We've some great information on our website about how to report the allowance on your tax return.

All the best.

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