Being asked by the boss to travel for work purposes can be demanding on staff \u2014 financially, physically and also emotionally. Out of this has developed more than one way to compensate employees; these being a travel allowance and the living away from home allowance (LAFHA).<\/p>\n When both were developed, the difference between the two were often decided by an ATO-initiated rule-of-thumb in that travel of less than 21 days was deemed to be the former, while more than 21 days was considered to have a more LAFHA flavour. The 21-day \u201cthreshold\u201d however no longer applies.<\/p>\n For travel allowances, typically employees are:<\/p>\n The ATO publishes guidelines each year on what it considers to be reasonable amounts for a travelling employee (here is TD2017\/19 for the 2017-18 year<\/a>).<\/p>\n However it has also been found that some employees may be on a travel allowance for six weeks or more.<\/p>\n It is often asked whether these transactions should be looked at under the FBT rules (for\u00a0LAFHA<\/a>) or the income tax rules (for\u00a0travel allowances<\/a>). The tax treatment (and therefore the financial outcomes) of both can be different.<\/p>\n Deciding factors The reality is that you could have someone who is away from home but is still considered to be only travelling. Alternatively you could have someone that is away from home for two weeks only, but in those two weeks was actually living away from home.<\/p>\n As tax adviser Tony Halcrow puts it: \u201cWhen an employee is required to travel on business and overnight their food, drink and accommodation expenses become deductible expenses and are FBT free for the employer. The difference between LAFH rules and travelling on business is quite simply the employee on LAFH has to temporarily change their usual place of residence and therefore their food drink and accommodation expenses become private and non deductible. And that is why the employer needs the FBT concession for such employees. It is a question of fact as to whether or not the employee has temporarily changed their usual place of residence as opposed to travelling around on business.\u201d<\/span><\/p>\n So it is a test of substance whether someone is just travelling or is actually living away from home. It would have to be substantiated to be proven in fact as a LAFHA. Similarly, if away from home and treated as a travel allowance, the ATO will generally not challenge such treatment if substantiated as travel.\u00a0Taxation ruling TR 2017\/D6<\/a>\u00a0deals with these factors.<\/p>\n The following general principles may be of guidance:<\/p>\n <\/p>\n![\"\"](\"https:\/\/cruzandco.com.au\/wp-content\/uploads\/2018\/04\/ace6bef769c64385701f22aebefede43.jpg\")
<\/a>That employees are required to travel for work has become increasingly significant, especially with the growing influence of a more global economy, and the sometimes necessary moving of businesses for expansion or reaching out to new markets.<\/p>\n\n
\n<\/strong>The FBT framework would generally provide for a more concessional tax outcome where certain prescribed requirements for a LAFHA is met in comparison with the income tax effect of a travel allowance.<\/p>\n\n