Living Away From Home Allowance Reasonable Food and Drink Calculator Published

Key Takeaways

• Tax-Exempt Limits: LAFHA payments are not taxable fringe benefits if they remain within the "reasonable" limits set by the ATO
• 2025-26 Rates: The reasonable food and drink amount within Australia is $341 per week for a single adult, with specific increments for additional adults and children.
• Substantiation Rules: Employees do not need to substantiate their food and drink expenses if the total does not exceed the ATO's reasonable amounts; however, full substantiation is required if expenses exceed these limits.
• Online Calculator: A dedicated calculator is available to quickly determine the total allowance, daily and weekly rates, and the exempt component based on household size, location, and travel dates.

What Is a Living Away From Home Allowance?

A Living Away From Home Allowance is a payment made directly by an employer to an employee to compensate for additional expenses because of being required to live away from their usual place of residence to perform their job.

These payments are classified as a fringe benefit for FBT purposes, but they are only taxable if the benefits exceed the limits deemed "reasonable" by the Tax Office.

How the Reasonable Food and Drink Amounts Work

When LAFHA amounts are paid within reasonable limits, they are not a taxable fringe benefit or as income.

The tax-exemption includes reasonable accommodation costs and reasonable food costs. The exempt food component is reduced by a statutory food amount, which is deemed to be $42 per week for adults (12 years and older) and $21 per week for children under 12.

The 2025-26 Reasonable Food and Drink Rates (TD 2025/2)

For the fringe benefits tax year commencing 1 April 2025, Taxation Determination TD 2025/2 establishes the weekly amounts considered reasonable for food and drink expenses. Within Australia, the reasonable amount is $341 per week for one adult, $512 for two adults, and $684 for two adults and two children.

For larger family groupings, the amount increases by $171 for each additional adult and $86 for each additional child.

For employees living away from home outside Australia, the reasonable amounts are determined by allocating the destination country to one of six cost groups, with weekly rates for a single adult ranging from $173 in Cost group 1 to $656 in Cost group 6.

How to Use the LAFHA Food and Drink Calculator

To assist in these calculations, an interactive LAFHA Food & Drink Calculator is available, and has been published at https://atotaxrates.info/allowances/lafha/.

Users can select the relevant FBT year, specify whether the location is within Australia or overseas, and input the number of adults and children in the household. Then by entering a start and end date, the calculator automatically determines the total allowance for the period, the daily rate, the weekly rate, and the total exempt component after deducting the statutory food amounts.

When Substantiation Is Required

Under the Fringe Benefits Tax rules, if the total food and drink expenses for an employee and their eligible family members do not exceed the reasonable amounts set out in the Commissioner's ruling, those expenses do not need to be substantiated.

However, there's an easy trap for employers to fall into, and that is if the total expenses exceed the reasonable amount, the substantiation provisions apply. That means an employee must substantiate all of the expenses incurred, or the employer will be liable for fringe benefits tax on the portion of the allowance that exceeds the reasonable limit.

For more information on these and related matters visit Taxrates.info.

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Website: https://taxrates.info