Company paying rent

Question

Hi,
My employer is moving me interstate (Sydney metro area from Brisbane) to build the business.
Is it possible for the company to legally pay my rent for the 12-24 month period I’m there & not incur FBT, and claim my rent as a deductible expense to the business?
If so I’m thinking about asking them to deduct the rent against my salary, saving me the tax payable on that portion of salary.
The company is paying for all relocation expenses.
I already claim a significant away from home allowance throughout the year due to work related travel.
Many Thanks,Tim

Answer


The allowance you receive for work related travel is probably a travel allowance that would appear on your PAYG summary. Living away from home allowance (LAFHA) is completely different. For a start it is a fringe benefit rather than something that appears on your PAYG summary. The LAFHA can be exempt if it meets certain criteria but it is expected that you will return to your current location in around 3 years time. So as long as you intend coming back your employer could pay your rent for that 12 – 24 month period, claim a tax deduction for it and not pay FBT. You can also have you and your family’s food bill paid for up to 3 years as an exempt fringe benefit too but only the amount over $42 per adult and $21 per child, this can be based on an estimate. During the 3 years you can rent out your old home or give up your lease it is only important that you intend to return to the area. MT 2030 has a lot of information on this that may interest your employer.

The relocation cost that are exempt from FBT are:
Removal costs
Travel costs for you and your family including meals and accommodation
Temporary accommodation and meals
Stamp duty, legal fees and real estate agents fees on selling your old dwelling and buying a new one. Though this one may get in the way of you qualifying for the LAFHA

Hint re relocation costs: Make sure your employer pays the actual relocation costs, no exemption from FBT is available if you receive a relocation allowance rather than a reimbursement and the allowance would be taxable with no qualifying tax deductions.

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