Private ruling: Fringe Benefits Tax
Date of advice: 7 October 2025
Published: 24 November 2025
Ruling period: FBT Year Ending 31 March 20XX | FBT Year Ending 31 March 20XX | FBT Year Ending 31 March 20XX | FBT Year Ending 31 March 20XX
Date scheme commenced: 1 April 20XX

Ruling: Q1: Is the allowance paid by the Employer to employees for meal and incidentals under Scenario 1 to Scenario 10 considered to be a living-away-from-home-allowance (LAFHA) for the purposes of subsection 30(1) of the Fringe Benefits Tax Assessment Act 1986 (FBTAA)? | A1: Scenario 1: No Scenario 2: No Scenario 3: No Scenario 4: No Scenario 5: Yes Scenario 6: No Scenario 7: No Scenario 8: Yes Scenario 9: No Scenario 10: Yes

Relevant facts and circumstances: The employees of the Employer entered into agreements for relieving into different roles in various areas of Australia. The employees are flown by plane to the various locations. The employees are provided with a meal allowance and an incidentals allowance but no separate vehicle or travel allowance is provided. Accommodation is paid for by the employer and can be provided in hotel rooms, self-contained apartments, motel rooms, townhouse and houses. The Employer does not encourage employees to travel with family members. The Employer does not cover any cost for family members who travel and stays with the employee. The employees only returns to their normal residence after the completion of the relieving. The Employer has provided 10 scenarios, with travel time varying between 4 days, up to 294 days with and without breaks and one scenario with more than 365 days.

Relevant legislative provisions: Fringe Benefit Tax Assessment Act 1986, section 30 | Fringe Benefit Tax Assessment Act 1986 , section 31 | Fringe Benefit Tax Assessment Act 1986, subsection 136(1) | Income Tax Assessment Act 1997, section 8-1 TR 2021/1 Income tax: when are deductions allowed for employees' transport expenses? | TR 2021/4 Income tax and fringe benefits tax: employees: accommodation and food and drink expenses travel allowances, and living-away-from-home allowances | TD 2025/2 - Fringe benefits tax: reasonable amounts under section 31G of the Fringe Benefits Tax Assessment Act 1986 for food and drink expenses incurred by employees receiving a living-away-from-home allowance fringe benefit for the fringe benefits tax year commencing 1 April 2025. Detailed reasoning | A 'fringe benefit' is defined in subsection 136(1) of the FBTAA, which requires, inter alia, the following conditions to be satisfied: | 1. A benefit is provided at any time during the year of tax. | 2. The benefit is provided to an employee or an associate of the employee. | 3. The benefit is provided by: | (i) their employer; or | (ii) an associate of the employer; or | (iii) a third party other than the employer or an associate under an arrangement between the employer or associate of the employer and the third party; or | (iv) a third party other than the employer or an associate of the employer, if the employer or an associate of the employer: | (A) participates in or facilitates the provision or receipt of the benefit; or | (B) participates in, facilitates or promotes a scheme or plan involving the provision of the benefit; | and the employer or associate knows, or ought reasonably to know, that the employer or associate is doing so; | 4. The benefit is provided in respect of the employment of the employee. | 5. The benefit is not one that is specifically excluded as per paragraphs (f) to (s) of the definition of a fringe benefit in subsection 136(1). | Is a benefit provided? | Subsection 136(1) of the FBTAA provides a broad definition of a 'benefit' as: | any right (including a right in relation to, and an interest in, real or personal property), privilege, service or facility and, without limiting the generality of the foregoing, includes a right, benefit, privilege, service or facility that is, or is to be, provided under: | (a) an arrangement for or in relation to: | (i) the performance of work (including work of a professional nature), whether with or without the provision of property; | (ii) the provision of, or of the use of facilities for, entertainment, recreation, or instructions; or | (iii) the conferring of rights, benefits or privileges for which remuneration is payable in the form of a royalty, tribute, levy or similar exaction; | (b) a contract of insurance; or | The definition of 'provide' and 'provider' in subsection 136(1) of FBTAA are as follows: | provide: | (a) in relation to a benefit - includes allow, confer, give, grant or perform; and | (b) ... | provider, in relation to a benefit, means the person who provides the benefit. | The Employer provides the employees an allowance for meal and incidentals and therefore a benefit is provided. | Is a benefit provided to an employee or an associate of an employee? | An employee is defined in subsection 136(1) of the FBTAA to include a current, future and former employee. Subsection 136(1) defines a 'current employee' to mean a person who receives, or is entitled to receive, salary or wages. | 'Salary or wages', as defined in subsection 136(1) of the FBTAA, means payments from which an amount must be withheld under section 12-35 of Schedule 1 to the Taxation Administration Act 1953 . The benefit is provided to employees of the Employer and therefore this condition has been met. | Is the benefit provided in respect of employment | The phrase 'in respect of' in relation to the employment of an employee is defined in subsection 136(1) of the FBTAA to include 'by reason of, by virtue of, for or in relation directly or indirectly to, that employment'. | The meaning of this phrase was considered by the Federal Court in J & G Knowles v. Federal Commissioner of Taxation [2002] 96 FCR 402; 2000 ATC 4151; 44 ATR 22 ( Knowles ) and Starrim Pty Ltd v. Federal Commissioner of Taxation [2000] FCA 952; 2000 ATC 4460; 44 ATR 487 ( Starrim ). | In Knowles the Full Federal Court considered the judgements in Smith v. FCT (1987) 164 CLR 513; 19 ATR 274; 87 ATC 4883 and Federal Commissioner of Taxation v. Rowe (1995) 60 FCR 99; 31 ATR 392; 95 ATC 4691 before concluding that it is not sufficient for the purposes of the FBTAA to conclude that there is a causal connection between the benefit and the employment. | At paragraph 26 the Court said: | Whatever question is to be asked, it must be remembered that what must be established is whether there is a sufficient or material, rather than a, causal connection or relationship between the benefit and the employment. | The meal and incidental allowance is provided because the employees are required to relieve other employees in various areas of Australia and as such, the benefit provided is considered to be 'in respect of' employment. | Therefore, this condition is satisfied. | Is the benefit excluded from the definition of a fringe benefit? | A benefit which comes within paragraphs (f) and (s) of the definition of a 'fringe benefit' in subsection 136(1) of the FBTAA is excluded from being a fringe benefit. Paragraph (g) of the definition of 'fringe benefit' excludes 'a benefit that is an exempt benefit'. | Living-away-from-home allowance and whether benefit excluded from the definition of a fringe benefit | Subsection 136(1) of the FBTAA defines a LAFHA benefit as a benefit referred to in section 30 of the FBTAA. | Subsection 30(1) of the FBTAA sets out the circumstances in which an allowance paid by an employer to an employee will qualify as a LAFHA benefit to an employee and states: | Where: | (a) At a particular time, in respect of the employment of an employee of an employer, the employer pays an allowance to the employee; and | (b) It would be concluded that the whole or a part of the allowance is in the nature of compensation to the employee for: | (i) Additional expenses (not being deductible expenses) incurred by the employee during a period; or | (ii) Additional expenses (not being deductible expenses) incurred by the employee, and other additional disadvantages to which the employee is subject, during a period; | by reason that the duties of that employment require the employee to live away from his or her normal residence; | the payment of the whole, or of the part, as the Scenario may be, of the allowance constitutes a benefit provided by the employer to the employee at that time. | As previously discussed, the first condition of subsection 30(1) of the FBTAA is satisfied. | The second condition of subsection 30(1) of the FBTAA requires that the allowance is paid for additional expenses that are not deductible. If the payment to the employees is a travel allowance this condition is not satisfied. A travel allowance is paid to cover additional expenses that are 'deductible expenses under section 8-1 of the ITAA 1997'. | A travel allowance falls within the definition of 'salary and wages' and is therefore, excluded from being a fringe benefit. | LAFHA versus Travel Allowance | A payment is a LAFHA if it is reasonable to conclude from all the surrounding circumstances that some or all of the allowance is in the nature of compensation to the employee for additional expenses incurred, or additional expenses incurred and other disadvantages suffered, because the employee is required to live away from his or her usual place of residence in order to perform the duties of employment. Additional expenses do not include expenses for which the employee would be entitled to an income tax deduction. | The whole or such part of the allowance that satisfies these tests is a LAFHA fringe benefit, the taxable value of which is calculated in accordance with the rules contained in section 31 of the FBTAA. | Taxation Ruling 2021/4 Income tax and fringe benefits tax: employees: accommodation and food and drink expenses travel allowances, and living-away-from-home allowances (TR 2021/4) provides guidelines on travel allowances and LAFHA. | Paragraph 130 of TR 2021/4 states, the main difference between a travel allowance and a LAFHA is that a: | i. travel allowance can only be paid to cover deductible accommodation and food and drink expenses and incidental expenses incurred by an employee when they are travelling on work | LAFHA is paid to provide compensation to an employee for the additional living expenses incurred by an employee because their duties of employment require them to live at location away from their usual residence. | Paragraph 133 of TR 2021/4 further provides, to determine whether an allowance is a travel allowance or a LAFHA, it is first necessary to determine what expenditure the allowance is designed to cover or compensate the employee for and whether those expenses are deductible under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997). Usual residence | The term 'normal residence' is defined in subsection 136(1) of the FBTAA as the employee's usual place of residence, when the employee's usual place of residence is in Australia. | The FBTAA does not provide a definition of the term 'usual place of residence'. | However, subsection 136(1) of the FBTAA defines 'place of residence' to mean: | (a) a place at which the person resides; or | (b) a place at which the person has sleeping accommodation; | whether on a permanent or temporary basis and whether or not a shared basis. | In the absence of a legislative reference, it is relevant to refer to the ordinary meaning of the word 'usual'. The Macquarie Dictionary defines 'usual' to mean 'habitual or customary ...'. | It is accepted that, in the current circumstances, an employee's permanent and settled principal place of residence is the employee's usual place of residence. | Relevant factors - travelling on work versus living expenses | To be deductible under section 8-1 of the ITAA 1997, the expense must have a sufficiently close connection to the performance of the employment duties and activities through which the employee earns income. It will not be enough to show some general link or causal connection between the expenditure and the production of income. | Paragraph 24 of TR 2021/4 provides, if any of the following factors apply, the employee will not be travelling on work and the accommodation and food and drink expenses incurred will be living expenses and therefore not deductible: | i. the expenses are incurred because the employee's personal circumstances are such that they live far away from where they gain or produce their assessable income | ii. the employee incurs the expenses because they are living at a location | iii. the employee incurs the expenses as a result of relocating from their usual residence. | Personal circumstances | An employee cannot deduct accommodation and food and drink expenses they have incurred where, due to their personal circumstances, they live far away from where they gain or produce their assessable income. | In these Scenarios, it is the employees' work requirements and not their personal circumstances that require them to stay away from their usual residence. It is not only the fact they must stay overnight away from their usual residence to earn their assessable income, but also it is their 'income-producing activities' or 'work activities' which require them to do so. | Relocation | Where an employee has relocated for work, the costs of accommodation and food and drink will be living expenses; regardless of whether moving to the new location is required by the employer or the work. There is no indication that the employees have relocated. The application states that the employees returns to his/her normal residence after completion of the relieving. | Living at a location | Paragraph 42 provides, the following factors would support a characterisation of an employee as living at a location away from their usual residence: | • there is a change in the employee's regular place of work | • the length of the overall period the employee will be away from their usual residence is a relatively long one | • the nature of the accommodation is such that it becomes their usual residence | • whether the employee is, or can be, accompanied by family. | No single factor is decisive in determining if an employee is living at a location and all factors should be considered. Reaching a conclusion as to whether an employee is living at a location away from their usual residence is a matter of judgement which requires an assessment based on consideration of all the factors. | Change in the employee's regular place of work | Paragraph 45 of TR 2021/4 outlines that where there is a change in the employee's regular place of work and the employee incurs accommodation and meal expenses to be closer to their new regular place of work, the employee will be living at that new location away from their usual residence. | Conversely, where there is no change in the employee's regular place of work and the employee incurs accommodation and food and drink expenses when they temporarily attend and stay overnight at another location in the course of carrying out their income-producing activities, the employee will not be living at the location they visit and work at temporarily (paragraph 46 of TR 2021/4). | The Commissioner's view of the concept of 'regular place of work' is outlined in paragraphs 24 - 38 of Taxation Ruling TR 2021/1: Income tax: when are deductions allowed for employees' transport expenses ? which states: | " 25. Most employees have a regular place of work, being a usual or normal place where the employee starts and finishes their work duties with a particular employer. | 26. In most Scenarios, identifying an employee's regular place of work is clear. In circumstances where it isn't clear, it may be necessary to consider in more depth the contract of employment, customary practice, the nature of the work duties, where these duties commence and at what point in time the employee is under the direction and control of their employer in order to determine where the employee's regular place of work is. | 32. ...In situations where it is difficult to conclude whether a second or subsequent place of work is also a regular place of work, an actual or anticipated duration of three months or more at the location would usually be sufficient for the location to amount to a regular place of work." | Length of period away from their residence | The 'length of period away' means the overall period of time the employee spends living at a particular location for work. Where an employee is living at one location for work for an extended period, that period is not broken by short trips they take from that location, for example travelling back to their usual residence on weekends or when travelling on work from that location. Generally, the longer an employee spends away from their usual residence for work, the more likely the employee is living at the location. | The nature of the accommodation | The nature of an employee's accommodation is relevant but does not determine whether the employee is living at a location away from their usual residence. Generally, where an employee works away from home for a considerable period and, for that period, stays in accommodation generally used for longer term accommodation (such as a house, unit or apartment or caravan), this would support a view that they are living at a location away from their usual residence. | Whether the employee is or can be accompanied by family or visited by family or friends. | An employee who is living at a location away from their usual residence can generally be accompanied or visited by their family or friends. | In this Scenario, the Employer does not encourage employees to travel with family members, nor does the Employer cover any cost for family members who travel and stays with the employee. | Conclusion on whether the employees are living at the location | Having regard to the above analysis, it is essential to look at the circumstances and length of stay for each category to determine if an employee is living at a location or travelling on work. | An employee under Scenario 5, Scenario 8 and Scenario 10: | I. is away from their normal residence for work purposes | II. is away for a length of time that is not considered relatively short | III. is staying in accommodation that is suited to both short and longer term stays | IV. is not prevented from being accompanied by family or visited by family and friends, although the employer does not encourage this. | In the circumstances it is considered that the employees under Scenario 5, Scenario 8 and Scenario 10 are living away from their usual residence. | Conclusion | Based on consideration of the above factors, the Commissioner considers that the employees are living at a location away from their usual residence. Therefore, the meal and incidental expenses incurred under Scenario, 5, 8 and 10 are living expenses and not deductible. | As all three conditions outlined in subsection 30(1) of the FBTAA have been met, the meal and incidental allowance that is paid to the employees under Scenarios 5, 8 and 10 are considered LAFHA benefits. | We accept that all other scenarios in this ruling will be considered to be travel on work. | Question 2 | If the answer to Question 1 is 'Yes', can the taxable value of the LAFHA fringe benefit be reduced pursuant to subsection 31(2) of the FBTAA? | Summary | The taxable value of the LAFHA fringe benefit can be reduced pursuant to subsection 31(2) of the FBTAA except | where employees are away for more than 12 months, section 31D will not be satisfied and therefore the reduction under subsection 31(2) will not apply. | Detailed reasoning | To determine whether a LAFHA receives concessional tax treatment, the criteria under subsection 31(1) of the FBTAA must be satisfied. | Subsection 31(1) of the FBTAA provides that: | 31(1) | This section applies to living-away-from-home allowance fringe benefit covered by subsection 30(1) in relation to a year of tax to the extent that the employee satisfies all of the following for the fringe benefit and the period to which it relates: | (a) | section 31C (about maintaining an Australian home); | (b) | section 31D (about the first 12 months); | (c) section 31F (about declarations). | Section 31C of the FBTAA requires the employee to maintain a home in Australia that continues to be available for the employee's immediate use and enjoyment during the period that the duties of employment require the employee to live away from it. | Guidance on maintaining a home in Australia is provided in the ATO's Fringe benefits tax: a guide for employees publication at Chapter 11.7 which states: | For the employee to maintain a home for their immediate use and enjoyment at all times, the entire home cannot be rented out or sublet while they are living away from it. The employee must incur the ongoing costs of maintaining the residence, such as mortgage or rental payments and rates. The employee must be able to return to the home at any time and take up immediate occupancy. | Pursuant to section 31D of the FBTAA, the fringe benefit must relate to all or part of the first 12 months the duties of employment require the employee to live away from the unit of accommodation where they usually reside in Australia. | As per the Facts, the employees maintain a home where they usually reside whilst they relieve in another role for periods up to 12 months Where employees are away for more than 12 months, section 31D will not be satisfied and therefore the reduction under subsection 31(2) will not apply. | The employees return to their home after completion of their relieving. The homes are available for his use at all times, thus meeting the requirements of section 31C of the FBTAA to maintain a home in Australia. | Under section 31F of the FBTAA, an employee must give to the employer a declaration, in a form approved by the Commissioner, purporting to set out: | for a fringe benefit to which section 31 (about employees who maintain an Australian home) applies: | (i) the address of the place in Australia where the employee usually resides when in Australia; and | (ii) that section 31C is satisfied for that place; and | iii) the address of each place where the employee actually resided during the period to which the benefit relates | In addition to the above declaration, employees are required to substantiate by way of documentary evidence or a declaration the amount of expenditure incurred on food if the amount exceeds the Commissioner's reasonable amount as provided in TD 2025/2 - Fringe benefits tax: reasonable amounts under section 31G of the Fringe Benefits Tax Assessment Act 1986 for food and drink expenses incurred by employees receiving a living-away-from-home allowance fringe benefit for the fringe benefits tax year commencing 1 April 2025. For the purpose of this ruling, an assumption that the requirements in section 31F of the FBTAA have been satisfied through the employee providing the Employer with the above declaration. | Therefore, subsection 31(1) of the FBTAA is considered to be satisfied. | The concessional tax treatment available in relation to the taxable value of a LAFHA - where the criteria in subsection 31(1) of the FBTAA are satisfied - is calculated as provided for under subsection 31(2) of the FBTAA, as follows: | 31(2) | Subject to this Part, the taxable value of the fringe benefit in relation to the year of tax is the amount of the fringe benefit reduced by: | (a) any exempt accommodation component; and | (b) any exempt food component. | Subsection 136(1) of the FBTAA defines the 'exempt accommodation component' in relation to a LAFHA fringe benefit to mean so much of the accommodation component as is equal to the total of the expenses that: | • are incurred by the employee for that accommodation; and | • are substantiated under section 31G. | The 'exempt food component' is defined in subsection 136(1) of the FBTAA as having the meaning given by section 31H of the FBTAA. Section 31H states: | 31H(1) | The exempt food component , in relation to a living-away-from-home allowance fringe benefit, is so much of the result of subsection (2) as is equal to the total of the expenses that: | (a) are incurred by the employee for food or drink for eligible family members during the period to which the fringe benefit relates; and | (b) if section 31G applies to the expenses - are substantiated under that section. | 31H(2) | Work out the result of the following: | Food component - Applicable statutory food total | where: | applicable statutory food total means the total of the statutory food amounts for eligible family members for the period to which the fringe benefit relates, reduced (but not below zero) by any amount that: | (a) might reasonably be expected to be the total normal food or drink expenses for those eligible family members had they remained living in their normal residence during that period; and | (b) was taken into account in working out the food component. | Section 31G(2) of the FBTAA provides that an employee must give to their employer, before the declaration date, one of the following: | • documentary evidence of the expenditure on accommodation and food or drink, or | • a declaration approved by the Commissioner. | The above requirement does not apply if the food and drink expenditure incurred by the employee does not exceed the amount considered reasonable by the Commissioner. Each year, the Commissioner releases a Taxation Determination setting out the reasonable food and drink amounts - relevantly 2025/2 - Fringe benefits tax: reasonable amounts under section 31G of the Fringe Benefits Tax Assessment Act 1986 for food and drink expenses incurred by employees receiving a living-away-from-home allowance fringe benefit for the fringe benefits tax year relates to 1 April 2025.