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Remuneration and Benefits Procedure - Living Away From Home Allowance (LAFHA) (Australia)

Parent Policy

Remuneration and Benefits

Preamble

The purpose of this procedure is to outline the requirements for a living away from home allowance for qualified staff members, including the application process.

This procedure applies to all fixed-term (and continuing only if related to the University’s Outside Studies Program) academic and professional staff members who meet the qualifying criteria for a Living Away from Home Allowance.

Definitions

Living Away From Home Allowance (LAFHA): is a concessional tax arrangement to compensate for additional expenses incurred and any disadvantages suffered because a staff member is required to temporarily live away from their usual place of residence in order to perform the duties of their employment. A LAFHA is made up of two components; exempt food component and exempt accommodation component.

Exempt Food component: is the amount of the allowance that represents reasonable compensation for the increased cost of meals likely to be incurred for the staff member and eligible family members as a result of living away from home. Guidelines in relation to what is considered a reasonable tax free food component, is provided by the Australian Taxation Office (ATO) annually. It is important to be aware that amounts over the reasonable amount incur a Fringe Benefits Tax (FBT) liability. Please refer to the Value of Food Component table for figures.

Exempt Accommodation component: this is the amount of the allowance which is reasonable compensation for the cost of the accommodation of the staff member (and family) while living away from home. This component is based on a table of values developed for the University according to the Academic Level and Professional HEW Level salary structure. Please refer to theValue of Food Component table for figures.

1. Who will qualify for a LAFHA?

To qualify for a LAFHA, a staff member must have relocated for employment purposes for greater than 21 days and have an intention to return to their usual place of residence upon completion of their assignment.

A staff member who is on the University’s Outside Study Program (OSP) can qualify for a LAFHA if they are a current employee of the University and have temporarily moved residence in order to undertake the OSP.

As an Exempt Fringe Benefit, a LAFHA is based on the Fringe Benefit Tax (FBT) year and will be reviewed annually as at 31 March.

The following staff members are ineligible for LAFHA:

  • casual staff members;
  • secondary 457 visa holders ie. where the visa was not sponsored by the University if the primary visa holder is receiving a LAFHA through the organisation in which they are employed; and
  • international staff members working in Australia on a working holiday visa (subclass 417)

2. Common scenarios

The following scenarios provide some examples where a staff member may apply for a LAFHA.

a. Relocation from overseas on a 457 visa:

  • employed on a fixed term contract of up to 4 years
  • living in rental accommodation
  • have not purchased a property
  • have not applied to become a permanent resident
  • intend to leave Australia at the end of assignment

NB: Staff members who hold a Temporary Business (Long Stay) Visa (subclass 457) which was obtained prior to 14th September 2009 are required at all times to meet and exceed the Minimum Salary Level (MSL) that existed at the time of visa approval. This requirement may affect the amount of LAFHA that can be salary packaged by visa holders that fall under this category.

b. Relocation from interstate:

  • employed on a fixed term contract not exceeding 2 years
  • living in rental accommodation
  • receiving rental income or have family residing in previous home
  • intend to return to previous home at end of assignment

c. Living in a rental property during working week and returning at home at weekends:

  • distance between home and work must be greater than 75km
  • can be employed on a continuing or fixed-term basis
  • food component must be apportioned to only reflect days living away from home
  • can only apply to a staff member

3. How does a staff member apply for a LAFHA?

To apply for a LAFHA, a staff member must:

  • Complete a LAFHA Checklist to determine eligibility; and
  • Return the checklist to HR Operations for assessment

If approved, HR Operations will:

The staff member must then return the completed form and declaration to HR Operations before the arrangement can take effect.

4. Annual LAFHA Declaration

A LAFHA Declaration will need to be completed annually in order for a LAFHA to continue into the next FBT year. This Declaration must be received by HR Operations prior to 31 March each year (in line with the FBT year) in order for an existing LAFHA to continue (should eligibility still exist).

5. Salary Packaging Procedure – Admin Fee

An administration fee of $20 per fortnight is charged for the salary packaging of a LAFHA to cover the administration and compliance costs of providing this benefit.

6. Financial Advice

Staff members are strongly advised to obtain financial advice from an independent financial advisor prior to considering the University’s offer to enter into any salary packaging arrangements

7. Cessation of LAFHA

The following are some of the common reasons why a staff member’s entitlement to LAFHA benefits may cease:

  • the staff member does not submit the annual Living Away from Home (LAFHA) Checklist and Living Away from Home Declaration;
  • in the case of overseas staff members, a period of 4 years has elapsed from the time the staff member last lived in their usual place of residence;
  • in the case of domestic staff members, a period of 2 years has lapsed from the time the staff member last lived in their usual place of residence;
  • the University becomes aware that the staff member no longer intends to return to his/her usual place of residence i.e. an employee from overseas has lodged an application for permanent residency;
  • the Australian Taxation Office requirements change to exclude continuation of LAFHA; and
  • in the case of overseas staff members, the staff member purchases a property in Australia.

Responsibility

Staff member: is responsible for complying with the requirements of this procedure and providing timely and accurate information in the LAFA Checklist, Salary Packaging Form and Declaration Form.

HR Business Partner / HR Service Hub – is responsible for informing of the availability of LAFHA to staff members who may be eligible.

Monash HR (HR Operations): is responsible for assessing LAFHA eligibility, calculating the value of LAFHA, reviewing the relevant forms provided by the staff member and initiating staffing action through payroll.

Related Procedures

Related Enterprise Agreement Clauses

The Monash University Enterprise Agreement (Academic and Professional Staff) 2009:

Related Documents

Related Forms

Version number: 1.0
Effective date: 25 July 2011
Procedure author: Director, HR Operations
Procedure owner: Executive Director (Monash HR)
Contact: