SMEs employing overseas workers to be hit by changes to living away from home allowance

Small businesses are concerned the Govenrment’s planned changes to living away from home allowances for temporary workers could victimise employees.

The Government has said the changes will affect perks for foreign residents, meaning they could not claim tax-free accommodation and meals as easily as they did before.

These benefits will disappear from July 1, but tax experts are already up in arms saying employees on contracts during that period would be forced to endure the changes without any transitional period.

Robert Evans, chief executive of IT services group Velrada, sources a significant number of his staff from overseas and says the changes are good in theory, but damaging in practice.

“What the Government is doing is addressing a situation where big corporations are paying people hundreds of thousands of dollars and it’s mostly executives.”

“I can understand why that would be an issue, but for most of the folks we have here, it’s going to be a problem when they do something on that big a scale.”

Evans says none of his staff are claiming anything anywhere near the level of perks the Government is referencing.

“I can understand how this can be a problem, and that’s fine. But when you see someone locating from another country to do the type of work we’re doing, it can be frustrating.”

Switched On Media co-founder Scot Ennis says his company is monitoring the changes.

“It’s something of a concern, but we don’t actually have full clarity around what we’ll do exactly at this point. But we do think it’s important, and we will address it.”

The changes dictate that anyone claiming the LAFHA will need to demonstrate actual expenditure on accommodation and food beyond a statutory amount, with the Government saying there is now a wider scope to claim reasonable costs.

Also, temporary residents will only be able to qualify for the allowance if they maintain a home in Australia from which they travel to other “fly in fly out” work.

Corporate Tax Association executive director Frank Drenth told the Australian Financial Review the Government needs to focus on domestic tax arrangements, which may have more illegitimate claims.

“Most Australian recipients from our experience are not genuinely living away from home,” he said, claiming the Government’s decision was a “knee-jerk” reaction.