The government had previously announced that the LAFHA would be closed to most temporary visa holders from 1 July 2012. However, this week’s announcement effectively preserves the status of people currently claiming LAFHA until 1 July 2014. This concession applies to people who were claiming LAFHA prior to 7:30 AEST on 8 May 2012.

People not eligible for the concession will no longer be able to claim LAFHA unless they have a second home already in Australia, from which they are living away. In this case, LAFHA can only be claimed for a maximum of 12 months. Concessions for “fly in, fly out” employees will continue, as will the current tax treatment of travel and meal allowances for short periods of travel (up to 21 days).

The announcement will be a major relief to 457 holders currently claiming LAFHA and their employers. Whilst the release of the legislation is yet to happen, employees already claiming LAFHA prior to the Budget announcement will be able to continue to do so until 1 July 2014.

Reference:  Commmonwealth Budget Papers – Revenue Measures