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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.