Updated as at 09 April 2022
The ATO’s new guidance is set to invalidate many commonly made trust distributions. It will challenge traditional family trust distribution strategies and will impact the required thinking around trustee resolutions as early as 30 June 2022.
Most allowances are taxed as assessable income of the employee receiving the payment. As an exception, paying a living-away-from-home (‘LAFH’) allowance is treated as a fringe benefit and subject to (generally more concessional) FBT rules. An employer may also provide other concessionally taxed fringe benefits to assist a LAFH employee.
The ATO has acknowledged that it is often difficult to determine whether an employee is travelling to work, LAFH, or relocated. Accordingly, it has released PCG 2021/3 to outline its compliance approach to assist employers in making this decision
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