A re-contribution strategy involves the withdrawal of a lump sum from your superannuation which you then re-contribute back.
By Shane Krautz - Director
The Government has announced it will introduce reforms to FBT in relation to Living Away From Home allowances and benefits.
Tax rort
As one of the issues raised at the recent Tax Forum, the Government claims that this tax exemption is being increasingly rorted by foreign workers and highly paid executives.
Indeed, the total amount of tax-free living-away-from-home allowance reported by employers to the Australian Taxation Office increased from $162 million in 2004-05 to $740 million in 2010-11.
Under the proposed reforms, the FBT Act will be amended to remove LAFHA as a fringe benefit. Access to the tax exemption for temporary residents will be limited to those who maintain a residence for their own use in Australia which they are living away from for work purposes, such as 'fly-in fly-out' workers. Individuals will also be required to substantiate their actual expenditure on accommodation and food beyond a statutory amount.
These reforms will not affect other tax concessions, such as those that apply to travel and meal allowances, and remote area fringe benefits.
From July 2012
The reforms will apply from 1 July 2012. This start date will enable the Government to undertake an extensive consultation process on these reforms, so appropriate transitional arrangements can be put in place, including in regional Australia.