See this post for the latest ATO view of LAFH Allowance==> Claiming a Deduction For Car Expenses Relating to Award Transport Payments.
==> Tax Deductions, Employer Reimbursements and Allowances
==> Claiming Travel Expenses for Fly in/Fly out Jobs
==> Overnight Travel Expenses You Can Not Claim
Many construction workers are missing out on large deductions for "Travel allowance" and "Living Away From Home Allowance" (LAFH).
In many cases, construction and other workers receive a travel allowance and or a LAFH allowance to cover the costs of accomodation, food and other costs while working away from home.
Some employers show the allowance seprately on the PAYG Payment Summary. Others don't. In many cases, construction workers can claim the cost of such travel in their tax return.
The ATO provides guidlines for "...what are the reasonable travel and meal allowance expense amounts..." that can be included in the tax return. Claims made under these guidelines do not require substantiation. Where workers wish to claim more than the guidelines the total expense must be substantiated (not just the amount in excess of the guidelines).
For the 2008 tax return the "reasonable allowance" can be between $170 and $404 per day, depending on circumstances. For example, If a construction worker spent 70 days of the year in a country area the deduction to be included in the tax return could be $11900 (Travel allowances received from the employer would reduce that amount).
Some care needs to be taken when "Living Away From Home Allowance" (LAFH) is received from the employer as a tax free allowance paid under the Fringe Benefits Tax (FBT) guidelines as such reimbursements are treated diffferently from a "travel allowance". These payments are made free of income tax and are also FBT exempt.
LAFH allowances are useually made for longer term arrangements. A claim against this reimbursement can only be made where the actual expense incurred by workers is greater than the allowance received. In this case the total amount claimed must be substatiated (ie. receipts for all costs - not just the amount in excess of the allowance). An exception to this is where the number of days away is 21 days or less on each arrangement.
Whether you are a construction worker, travelling sales person or for other reasons your employment requires you to travel away from home you may be entitled to a substantial LAFH deduction. The LAFH allowance relates to both domestic and overseas work related travel.
If you havn't claimed the deduction in your current or previous tax returns you can amend up to two years after the assessment was issued. There may be additional tax dollars you are currently entitled to?
If you believe you have missed out on this deduction you can contact our office on 07 3208 3888 or by email at firstname.lastname@example.org and discuss it further. It doen't matter if you are local or interstate - we can still do your tax returns by internet, email or snail mail.
Check out our web page at http://www.mytaxzone.com.au/ for other great tax tips and products.
By David Maynard CEO
My Tax Zone