Tax experts welcome federal government delay for living away from home changes

Tax experts have welcomed a decision by the federal government to delay changes to the Living Away From Home allowance for a further three months, although a survey of clients made by accounting firm PwC shows businesses are already changing their plans.

The changes, which restrict who can claim the allowance, were expected to come into effect from this Sunday, July 1. But federal Assistant Treasurer David Bradbury announced yesterday the changes will start from October instead.

"These reforms will better target the tax concession for LAFH allowances and benefits to people who are legitimately maintaining a home away from their actual home in Australia for an initial period," Bradbury said.

The introduction of the laws will now be shifted to October 1.

"This deferral will give employers and employees more time to prepare for the new arrangements," Bradbury said.

The changes mean temporary residents will need to maintain a home for their own use in Australia to get the concession, and all individuals will need to substantiate their expenditure on accommodation and food.

In the budget, the government also announced changes requiring permanent residents to maintain a home for their own use in Australia if they are to claim the concession, and a 12-month limit on how long individuals can use the concession.

Senior tax counsel at the Tax Institute Robert Jeremenko says the delay is a welcome change.

"The government really did listen to the concerns of the Tax Institute and the fact you need an appropriate amount of time in this case to help employers adjust."

"Of course, it doesn't change the overall policy, but they do deserve plaudits for delaying this for three months, particularly as they introduced the bill yesterday."

But according to a new survey from PwC, businesses are already getting their affairs in order. Out of a survey of 121 clients, 14% said at least one employee has left or changed plans because of the new laws.

Also, 99% had considered the impact the changes will have, and 55% said attracting new employees as a result of the changes was a concern.

One participant pointed out they have had two employees give notice to return home before June 30 as a "direct result" of the changes.

PwC director Jennifer Miller said in the report the reality of the reforms "is now being felt by a number of organisations".

"Employees are returning home, both voluntarily and at the direction of employers. Recruitment strategies, remuneration strategies and assignment policies are being changed."

"A broad range of support measures are being implemented to help impacted employees adjust to the change in their financial position."

Jeremenko says while there are still details to be worked out, an initial reading of the draft bill suggests the government has listened to the industry's concerns with regard to transitional arrangements.

"The changes are coming, but the government does deserve some recognition for the delay."

This article originally appeared on SmartCompany.