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Permanent Residency

In light of the recent legislative changes, developing a policy for LAFHA & Relocations policy is not an easy task. Here’s a few key points I hope will help.

The following require consideration:

1.            The application or not of the transitional rules (generally only applies to permanent residents)

2.            In relation to accommodation, the substantiation requirements are such that it will be necessary to obtain evidence of actual payment

3.            Where the accommodation allowance is greater than the actual expense, the excess is subject to FBT

4.            Contracts will need to clearly show the split between accommodation & food components

5.            Where the food component is greater than the ATO reasonable amounts, it will be necessary to obtain full substantiation from the employee

6.            Where the food component is greater than the ATO reasonable amounts, it is recommended that the excess be categorised as an incidental allowance

7.            Where the accommodation component is greater than the actual expense, it is recommended that the excess be categorised as an incidental allowance

In regards to declarations, whilst these will be required, it will also be necessary to obtain substantiation for the accommodation expenses and possibly the food.


2013 FBT Return Preparation Seminars – Melbourne, Sydney & Brisbane & some key areas to start thinking about

With an unprecedented number of law changes and increased ATO focus, attending one of our 2013 FBT return preparation seminars is an absolute must do. Our 2013 FBT return preparation seminars will be practical and cover the important law changes for LAFHA, Relocations, Cars, Airline Transport Benefits and In-house Benefits, and how these will impact on your 2013 FBT returns.
We will work through the identification and valuation of all benefit categories, and explain what information and documentation is required to claim an exemption, concession or a reduction.
We are holding three full day FBT return preparation seminars in March 2013. Spaces are limited to maximise learning. The dates, locations and registration links are as follows:
Melbourne, Thursday 14 March – Register online here: http://www.cvent.com/d/dcqx6v/1Q
Sydney, Wednesday 20 March – Register online here: http://www.cvent.com/d/dcqx6v/1Q
Brisbane, Wednesday 27 March – Register online here: http://www.cvent.com/d/dcqx6v/1Q
Alternatively, download and print out the registration form here: http://www.fbtsolutions.com.au/pdf/fbt_return2013_seminar.pdf
Early bird – register by 25 January and you only pay $550 including GST.
On time bird – after 25 January, you pay $660 including GST.
Loyal bird – if you or one of your colleagues has previously attended any of our seminars, reduce the applicable fee for each attendee by $55 – that’s our way of saying thank you for your loyalty.

CPD / CPE Hours – 6.5 hours, a certificate in your name will be provided.

Key areas for 2013 FBT Returns
Here are some of the key areas to consider when planning your 2013 FBT return preparation process:

  1. Planning – start the process early, think about the prior year issues and business changes
  2. Prepare a list of updated key contacts – internal and external, and confirm availability
  3. Prepare a timetable of key dates, resources and responsibilities
  4. Law changes – consider the key law changes to LAFHA, relocations, airline transport benefits, cars and in-house benefits. We’ll cover these in detail at the seminars
  5. Car parking – understand where the benefits are being provided, the duration and source the lowest daily rates www.fbtme.com.au – our pricing is competitive, we’ll beat any written quote by 15%.
  6. Training – unless you focus on FBT all year round, then it is recommended that you attend a training session – register here for our full day FBT return preparation seminar: http://www.fbtsolutions.com.au/pdf/fbt_return2013_seminar.pdf or http://www.cvent.com/d/dcqx6v/1Q
  7. LAFHA – understand who received LAFHA, the start and end dates, the food and accommodation components and who was eligible for the transition
  8. LAFHA – for those employees who are eigible for the transition, check that the accommodation allowance is equal to or less than the actual renatl expense
  9. LAFHA – issue declarations now for those who’s LAFHA ended on 30 September 2012. Let me know if you require a template declaration.
  10. Relocations – pull together a list of employees who relocated, either temporarily or permanently and start understanding the circumstances of their relocation and the    remuneration or reimbursement arrangements
  11. New benefits – were new benefit offerings made in 2012 /13?
  12. Cars – start early to understand the cars outside the SFM transitional rules and ensure logbooks are on file and compliant.
  13. Were there any big parties? Start gathering the detailed costings and understanding the nature of the event/s.

Talk to us about your FBT needs. If you have a query, please let us know.

Yours in FBT,

Paul Mather
Director & Registered Tax Agent
FBT, Payroll & Salary Packaging Solutions
T: 02 8079 2924 F: 02 8249 8101 M: 0403 050 358
E: paul.mather@fbtsolutions.com.au
W: www.fbtsolutions.com.au
A: Level 12, 95 Pitt Street, Sydney NSW 2000
P: PO Box 4508, Sydney NSW 2001

What are the changes?

As we all know, from 1 October 2012, the Living Away From Home rules have been significantly overhauled. Whilst the rules remain in the FBT law, there is an increased requirement to ensure LAFHA payments are properly tracked and categorised. The main changes are as follows:

(a)  The taxation of LAFHA will continue to occur wholly within the FBT regime

(b)  LAFH benefits will only be FBT exempt where the  employee maintains a home in Australia (subject to transitional rules and fly-in-fly-out or drive-in-drive-out arrangements)

(c)  LAFH benefits will only be FBT exempt for the first 12 months of each work location (subject to transitional rules), unless the employee is on a fly-in-fly-out or drive-in-drive-out arrangement

(d)  LAFH benefits will only be FBT exempt to the extent they are actually incurred by the employee and substantiated

(e)  Substantiation provisions require documentary evidence of accommodation and food and drink expenses. Documentary evidence includes:

  1. normal LAFHA – a declaration in an approved format
  2. fly-in-fly-out or drive-in-drive-out arrangement – a different declaration in an approved format
  3. requirement for the employee to substantiate their expenses

(f)   There are transitional rules up to 30 June 2014

  1. Will apply to permanent residents who were LAFH as of 8 May 2012 to access concessional treatment after 1 October even where not maintaining a home in Australia.
  2. Will not apply to temporary or foreign residents after 1 October 2012, unless they are maintaining a home in Australia
  3. The transitional rules are subject to there being no material amendments to the employee agreement

Want to learn more:

2013 FBT Return Preparation Seminars

Registration form:  http://tinyurl.com/8b64uqw or online at: http://www.cvent.com/d/dcqx6v/1Q

Melbourne 14 March – Sydney 20 March – Brisbane 27 March

Managing the changes

There are a number of practical challenges that require managing:

A variety of LAFHA scenarios

From 1 October, it is possible that organisations will have a variety of LAFHA scenarios, including the following:


Payroll   Code

Fully exemptLAFHA Accommodation is   equal to or less than actual rental expense

LAFHA Food is equal to   or less than the exempt component


LAFH Accom – Exempt


LAFH Food – Exempt

Fully TaxableEmployee doesn’t qualify   for the transition or not eligible from 1 October


LAFH Accom – Taxable

LAFH Food – Taxable

Partially taxable accommodationAccommodation allowance   in excess of actual cost. Therefore, the amount of the allowance up to actual   cost is exempt, and the excess is taxable and subject to FBT


LAFH Accom – Exempt
LAFH Accom – Taxable
Fully exempt / fully taxableThe employee qualifies   for the transitional LAFHA arrangements on 1 October 2012 and then on 1   December 2012 has a material change in contract From 1 Oct to 30 NovLAFH Accom – Exempt

LAFH Food – Exempt


From 1 Dec to 31 March

LAFH Accom – Taxable

LAFH Food – Taxable

The reason for setting out the above 4 scenarios in a table is to illustrate some of the complexities brought about by the law changes and the need to manage these scenarios carefully in the payroll system. It must be noted that other scenarios will exist!

Change over challenges

From our experience, organisations are taking a variety of approaches to managing the change over to the new rules and/ or applying the transitional rules. A common, but generally unintended approach due to time pressures, results in three time periods across the 2013 FBT return year as follows:

LAFHA paid from 1 April 2012 to 30 September 2012

  1. LAFHA paid from 1 October 2012 to the date a decision is made
  2. LAFHA paid from the date a decision is made until 31 March 2013

The reason for the above is due to a number of factors, including:

  1. the short time frame available to employers from the date of the law change to the start date of 1 October. Basically, it may not be  physically possible to understand the law changes, whilst understanding each employee’s personal and contract position and put the appropriate change in place, including consulting with the employee (remembering that the law only received Royal Assent in September);
  2. employers required time to develop and agree a policy, and determine the appropriate treatment to apply to each employee; and
  3. some employers were / are constrained by workplace agreements and other business needs

And the above doesn’t recognise that some organisations have / had trouble with allocating responsibility for the change.

LAFH Declarations

The ATO have issued 4 approved LAFH declaration formats. It is vital that the correct declaration is completed by each employee.

Importantly, for many employers who stopped paying LAFHA to temporary residents as at 30 September, declarations up until that date are required. Whilst it may feel like rubbing salt in to the wound, it is preferable to go through that process sooner than later. If an employee leaves and a signed declaration is not available, then come FBT return time, the employer will be faced with additional FBT liabilities.


The transition to the new LAFHA rules is a difficult process and many organisations are still working through the rules and trying to apply these to the employee’s personal circumstances, contractual agreements and broader agreements.

Payroll has an increased role to play in categorising LAFHA payments between taxable and exempt, and splitting components between the exempt portion and the excess taxable portion.

Many employers will be faced with significant FBT liabilities due to a range of factors and continued additional workload in the short to medium term. To the extent that payroll can help to manage this burden, this will in turn help to manage risk and deliver accurate data for FBT reporting requirements in May 2013. Want to learn more:

2013 FBT Return Preparation Seminars

Registration form:  http://tinyurl.com/8b64uqw or online at: http://www.cvent.com/d/dcqx6v/1Q

Melbourne 14 March – Sydney 20 March – Brisbane 27 March

Planning is well under way for our 2013 FBT Return Seminars. Register here:  http://www.fbtsolutions.com.au/pdf/fbt_return2013_seminar.pdf

The 2013 FBT returns will be a big challenge for those providing LAFHA. There will be many transitional issues to analyse and relocation costs to understand.

Day Date Time Topic City Early Bird Price – Register by Friday 25 January 2013 After 25 January 2013
Thursday 14-Mar-13 8.45am – 4.45pm Preparing Your 2013 FBT Return Melbourne $550 $660
Wednesday 20-Mar-13 8.45am – 4.45pm Preparing Your 2013 FBT Return Sydney $550 $660
Wednesday 27-Mar-13 8.45am – 4.45pm Preparing Your 2013 FBT Return Brisbane $550 $660

Register here: http://www.fbtsolutions.com.au/pdf/fbt_return2013_seminar.pdf

Further details:paul.mather@fbtsolutions.com.au