Living away from home for work purposes has always been an expensive affair and has required a lot of work in this area.
LAFHA had been in scrutiny for sometime now and the new reforms have been announced. The LAFHA arrangements entered after 8 May 2012 will come into effect from 1st October 2012, whereas arrangements entered prior to the date will be treated differently depending on the type of reform applicable.
The first reform states that the taxpayer needs to satisfy the “maintenance of home for personal use” condition, which means that if the tax payer is living away from home, he would need to be able to show that he is maintaining his first home apart from the one that is being used to live away for work purposes.
The second reform has a “12 month limit” which reserves that the concession can only be claimed for a maximum of 12 months for a single location of work.
The third reform talks about the “substantiation rule” which states that the taxpayer has to keep invoices and records above the reasonable amount for the expenditure incurred while living away from home.
The last reform targets the temporary residents who maintain a home for personal use outside Australia. However, the tax office is open to consider exceptions that can demonstrate their case otherwise.