2 year overseas posting

Question

Hi,
If an Australian Resident Tax payer who was posted overseas in Japan for a period of two years (He was based in Tokyo for the whole duration
) was paid the following allowance’s In addition to his normal salary:

  • Expat Allowance- Taxed
  • Location Adj- Taxed
  • Trans Assist- Taxed
  • Untaxed Cost of Living Allowance.

Can he claim his payroll deduction of Rent OS and the reasonable weekly food and drink component for overseas travel as ruled by the ATO. (

Answer

Your client is living away from home not travelling so none of his costs are tax deductible in his personal tax return, even with receipts. Any living away from home allowance he receives is a fringe benefit so only his employer has to worry about the tax on that allowance and it will be exempt from FBT for the first year, if he meets all the conditions. You do not have to include that untaxed living away from home allowance in his tax return. I hope his employer has not included it on his PAYG summary as an allowance. If they have you need to get them to remove it as it is a fringe benefit not an allowance. All the other allowances are rightly taxed because they are just the same as a site allowance, compensation for working conditions so fully taxable.

Reference TR 2017/D6 https://www.ato.gov.au/law/view/document?DocID=DTR/TR2017D6/NAT/ATO/00001

Please bear in mind that this answer is based solely on the information you have provided to me. I am relying on your professional judgement as to whether there is anything else that is relevant.

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