Living Away From Home Allowance Rates 2026: A Guide

By Panbo Ye, CFP^®, FCPA, SMSF Specialist Advisor · Founder of Everglow · Updated 9 October 2026

A specialist needs to relocate from Brisbane to regional New South Wales for a fixed-term project. A medical professional takes a temporary placement in a hospital far from home. A new migrant arrives in Australia on assignment and the employer wants to support the move without creating avoidable tax problems. In each of these situations, living away from home allowance rates matter, but the rate itself is only part of the story.

The harder questions usually sit behind the number. Is the payment really LAFHA, or is it a travel allowance? How should food and accommodation be separated? What happens when the assignment keeps going and the original plan runs past the first year?

Written by Panbo Ye, CFP® | FCPA | SSA | Founder, Everglow

Introduction

LAFHA is one of those areas where many employers start with a simple intention. They want to reimburse the actual cost of sending someone away from home for work. The rules, however, sit across fringe benefits tax, payroll, employment terms, substantiation, and timing.

That’s why a narrow focus on rates can be misleading. A rate may look reasonable on paper, but if the arrangement is structured incorrectly, the tax outcome can change quickly. The position is especially important for business owners, project-based employers, new migrants, and professionals who move between states or remote locations for temporary work.

In practice, the strongest LAFHA arrangements are the ones built with discipline at the beginning. They define the purpose of the assignment, separate food from accommodation, document the employee’s circumstances properly, and plan ahead rather than waiting for the FBT year-end.

Practical rule: If the paperwork and the facts don’t align, the rate usually won’t save the arrangement.

Understanding LAFHA and Its Purpose

An employee takes a temporary role in another city, rents a unit near the worksite, and keeps their usual home running back in Australia. The extra rent, food, and disruption are private costs, but they arise because work has pulled that person away from home. LAFHA exists to deal with that situation under the fringe benefits tax rules, provided the arrangement is temporary and properly documented.

Used correctly, LAFHA is not just a rate or payroll label. It is a structured way to recognise additional non-deductible living costs without turning the payment into disguised salary.

That distinction matters. Employers often focus on what can be paid, when the better question is why the payment is being made and how long the employee will be at that location.

Why LAFHA exists

The policy intent is practical. If an employee must maintain their normal home and also live somewhere else for work, they can face a second layer of living costs that would not exist otherwise. The concessional treatment is meant to relieve some of that burden, but only within a defined set of conditions.

The arrangement needs to reflect a temporary living-away-from-home position. If the employee has effectively relocated, or if the allowance is merely boosting take-home pay, the tax treatment can shift quickly and create FBT exposure for the employer.

This is particularly relevant for new migrants and internationally mobile employees. Questions about usual residence, home maintenance, and Australian ties often sit in the background of a LAFHA review. For that wider context, see whether you are an Australian resident for tax purposes.

Core conditions to check early

Before setting up LAFHA, employers should test the facts against a few basic points:

• Usual residence: The employee needs a genuine home they are living away from, not a new place that has become their permanent home.
• Temporary location: The work location and nearby accommodation need to support the conclusion that the arrangement is temporary.
• Reason for the payment: The allowance should compensate for additional private living costs caused by the work requirement.
• Records: The employer needs declarations, payroll treatment, and supporting evidence that match the arrangement on the ground.

The 12-month limit is where many otherwise valid arrangements start to fail.

For employees who maintain a home in Australia where they usually reside, concessional treatment at a particular work location generally only applies for the first 12 months. After that point, the employer may be exposed to full FBT on the relevant benefits at that location, as noted earlier in the same ATO guidance.

In practice, this is the planning issue that deserves more attention than the published rates. A rate can be reasonable and the arrangement can still become expensive if no one tracks the start date, extensions, site changes, or whether the employee is still living away from home.

For readers who want a broader tax background, it also helps to understand the mechanics of FBT itself. Everglow’s guide to fringe benefits tax can help frame that wider issue.

LAFHA vs Travel Allowance A Critical Distinction

Many errors begin with employers still referring to an old idea that less than 21 days means travel and more than 21 days means LAFHA. That approach is outdated.

The ATO no longer treats the old 21-day rule as determinative. Instead, the focus is on the substance of the arrangement. The ATO’s employee guide explains that LAFHA applies where an employee has taken up temporary residence away from their usual home to perform duties at a new temporary workplace, while travel allowance applies when the employee is travelling in the course of work without changing their job location. The same guide notes that LAFHA is generally treated concessionally under the FBT regime, while travel allowances are generally assessable income to the employee, who may claim deductions for expenses incurred. It also notes that for the 2025-26 year the daily domestic travel rate is $323.00 per day based on the lowest capital city rate and lowest salary band, in the ATO employee travel and living-away-from-home guide.

What the ATO looks at now

The practical question is not “How many days is the employee away?” The practical question is “What is the employee doing?”

If the employee is moving into temporary accommodation near a new work location, that points toward LAFHA. If the employee remains based at the same job location and is on work travel, that points toward travel allowance.

The label used in payroll doesn’t decide the outcome. The facts do.

For employers dealing with mobile teams, a focused explanation of this distinction can also help. Everglow has a dedicated page on the working away from home allowance that is useful when reviewing policy settings and payroll treatment.

A practical comparison

Common signs of misclassification include:

• Payroll uses one label for convenience: The contract and roster point one way, but payroll calls it something else.
• Accommodation setup tells a different story: A leased apartment often suggests temporary residence rather than short business travel.
• The assignment keeps extending: What started as travel can become a living-away-from-home arrangement if the facts change.

Current Living Away From Home Allowance Rates and Components

The phrase living away from home allowance rates can be confusing because there isn’t just one figure that solves every case. In practice, LAFHA is usually considered in two parts. One part relates to accommodation. The other relates to food and drink.

The two main components

The accommodation component is usually driven by actual and reasonable costs. Employers often get into trouble when they use rough figures without clear records. A cleaner approach is to document the accommodation arrangement from the start and retain supporting evidence.

The food component is more technical. The allowance can’t directly mirror what an employee spends at the supermarket or on takeaway. The exempt amount is determined by reference to statutory food amounts and the ATO’s reasonable food benchmarks.

A practical approach usually involves:

• Separating components clearly: Don’t bundle accommodation and food into one vague allowance.
• Matching accommodation to actual circumstances: Hotel, apartment, serviced unit, or employer-paid accommodation all need different treatment.
• Reviewing family composition: Adults and children affect the food calculation.

How the food component works

For the 2026 FBT year, the statutory reduction for food is $42 per week for each adult aged 12 or older and $21 per week for each child. For example, where the ATO reasonable food amount is $289 per week for one adult, the maximum FBT-exempt food component is $247, being $289 minus $42, under the Victorian University policy summary of LAFHA food amounts.

That means the food calculation should be deliberate, not guessed.

A simple way to think about it is:

1. Start with the relevant reasonable food amount.
2. Subtract the statutory amount for the adults and children involved.
3. Treat any excess carefully, because amounts above the benchmark can create FBT exposure.

Working principle: The exempt food amount is not the same as the total food allowance paid.

This matters practically because relocation costs often arrive in clusters. Rent, storage, transport, and removal expenses all hit at once. If you’re trying to estimate the broader move budget, an operational resource such as this guide to removalist pricing can help frame the non-tax costs around the assignment, even though the tax treatment still needs to be considered separately.

Cross-border employees should also look at the wider tax picture, especially where overseas income or overseas housing arrangements sit in the background. Everglow’s article on Australian tax on foreign income is relevant when the move is part of a larger international assignment.

A Practical Worked Example

An engineer on a temporary assignment

Consider Li Wei, an engineer seconded to Sydney for a fixed-term infrastructure project. His employer arranges temporary accommodation near the site and pays a separate amount for meals. The assignment is temporary and the employer wants the payroll treatment to reflect the actual nature of the relocation rather than merely adding more cash to salary.

The employer’s first task isn’t to choose a number. It’s to classify the arrangement correctly, separate accommodation from food, and decide what evidence it will hold. For the food portion, the employer can use the statutory food reduction approach described earlier. For the accommodation portion, it needs records that support the amount paid and the reason the expense arose.

A practical file for this kind of employee would normally include:

• Assignment documents: Start date, location, expected end date, and purpose of the secondment.
• Accommodation records: Lease, invoices, or direct payment evidence.
• Food calculation support: Household composition and the benchmark used.
• Payroll mapping: Clear codes so the allowance isn’t mixed with ordinary salary.

Employers sometimes also need to check whether staff are trying to claim work-related expenses personally when the employer has already structured support through a LAFHA arrangement. That’s where confusion can arise, and a separate review of work-related travel expenses without receipts can help payroll and employees stay aligned.

Where award rates fit and where they do not

In some sectors, award settings affect the conversation. The Building and Construction General On-site Award 2020 provides a living away from home allowance for distant work of $700 per complete week or $100 per day for broken parts of a week, according to the Paycat summary of the Building and Construction General On-site Award allowance data.

That’s useful, but it doesn’t remove the need to check tax treatment separately. Award compliance and FBT compliance are related, not identical.

This is often where structured advisory support becomes useful. For employers with multiple interstate assignees, project staff, or overseas secondees, a coordinated review through business advisory services can help align contracts, payroll, tax, and documentation before the issues become expensive.

Employer Obligations Risks and Responsibilities

A common failure point looks like this. An employee moves interstate for what starts as a short project, payroll sets up a LAFHA, everyone focuses on the weekly rate, and no one diarises the review date. By the time the assignment rolls past 12 months, the tax position may have changed materially and the employer is left correcting payroll, FBT, and employee expectations after the fact.

The 12 month cliff

The main strategic risk is the 12-month limit at a particular work location.

As noted earlier in the article, concessional LAFHA treatment is generally limited to the first 12 months an employee is living away from home at that location while maintaining their usual Australian residence. If the placement continues beyond that point, the employer needs to reassess the arrangement promptly. In practice, costs can rise sharply at this juncture, making a package that looked efficient at the start expensive to keep on the same terms.

This matters for cash flow as much as compliance. Employers often budget for the assignment on the basis of the initial treatment, then discover late in the piece that the structure no longer fits. New migrants and recently relocated employees need extra care here, because businesses sometimes assume any temporary accommodation arrangement will qualify. It will not. The facts around the employee’s usual place of residence and the temporary nature of the posting still need to stand up.

A sensible approach is to review the arrangement before business needs force an extension.

• Set the review date at the start. Put the 12-month point into payroll, HR, and manager calendars as soon as the assignment begins.
• Define the assignment clearly. Contracts and secondment letters should state the work location, expected duration, and why the role is temporary.
• Reprice extensions early. If the role may continue, model the FBT and remuneration impact before agreeing to extend it.
• Check employee assumptions. Staff often focus on the allowance amount, not the conditions that support concessional treatment.

Administration and payroll risks

Most LAFHA problems are not caused by aggressive tax planning. They come from ordinary administration failures.

A single blended allowance for rent, food, and incidentals makes review harder. Reimbursements paid without clear supporting records create audit exposure. Payroll may treat the amount one way for FBT, another way for payroll tax, and overlook the employment law position altogether. Over time, the original facts can also change. The employee stays longer than planned, moves accommodation, brings family over, or stops maintaining the former home, but the payroll setup stays exactly the same.

Those details matter because LAFHA is not just a rate-setting exercise. It is an arrangement that depends on facts, documentation, and regular review.

Smaller employers are not exempt from that discipline. A founder-run business, family company, or contractor business with staff still carries the same employer responsibilities once employees are involved. If that broader staffing framework is still being set up, Everglow’s guide on whether a sole trader can employ staff is a useful starting point.

Well-run LAFHA arrangements are usually straightforward on paper and carefully monitored in practice. That combination supports compliance and protects financial wellbeing for both the business and the employee.

Practical Next Steps for Employers and Employees

1. Confirm the facts first. Decide whether the arrangement is a temporary relocation or ordinary work travel before payroll sets anything up.
2. Document the employee’s living situation. Make sure the usual residence, temporary work location, and assignment period are clearly recorded.
3. Separate accommodation and food. Don’t rely on a single blended allowance if the components need different treatment.
4. Set up payroll carefully. Check FBT, payroll tax, and employment settings together rather than in isolation.
5. Track the assignment timeline. Put the 12-month review date into the calendar as soon as the arrangement starts.
6. Get advice before extending or redesigning the package. A short review early can be far more useful than fixing the issue later. If you’d like to discuss your own circumstances, you may contact Everglow through the contact page.

The rate matters, but the structure matters more. A well-managed LAFHA arrangement can support workforce mobility sensibly, while a poorly managed one can create avoidable tax and payroll risk.

If you would like clarity on how these principles may apply to your own circumstances, you may wish to speak with a qualified adviser. You can contact Everglow Prosperity on 1300 913 929 or email contact@everglow.au to arrange a discussion.

If you prefer to book directly, you may also schedule a meeting with Panbo online via Calendly: Book a meeting with Panbo.

General Advice Warning: The information contained in this article is general in nature and does not take into account your personal objectives, financial situation, or needs. Before acting on any information, you should consider whether it is appropriate for your circumstances and seek personal financial, tax, or legal advice from a qualified professional.