The Australian Taxation Office ('ATO') has recently announced updated amounts for the reasonable food component of a LAFHA for expatriate employees into Australia and domestic transfers applicable for the 2012/13 FBT year.
These new rates are effective 1 April 2012:
| No. of Expatriates | Reasonable food component per week |
Less Statutory food component |
Net amount |
| One Adult | $250 | ($42) | $208 |
| Two Adults | $400 | ($84) | $316 |
| Three Adults | $450 | ($126) | $324 |
| One Adult and one child | $325 | ($63) | $262 |
| Two Adults and One child | $450 | ($105) | $345 |
| Two Adults and two children | $450 | ($126) | $324 |
| Two Adults and Three Children | $524 | ($147) | $377 |
| Three Adults and One Child | $524 | ($147) | $377 |
| Three Adults and two children | $599 | ($168) | $431 |
| Four Adults | $599 | ($168) | $431 |
Adults' for this purpose are persons who had attained the age of 12 years before the beginning of the FBT year.
In relation to larger family groupings, the Australian Taxation Office (ATO) accepts a food component based on the above figures plus $150 for each additional adult and $75 for each additional child.
To reduce the FBT on the statutory food component we recommend that the employee contracts to pay the statutory food component themselves and have the employer only pay the employee the additional reasonable component.
For example, if the reasonable food component was A$250 in accordance with the table, and pursuant to an agreement the employee paid A$42 themselves and the employer paid A$208, there would be no FBT payable on the amount of A$208 paid by the employer.
Please note that the table above applies only in respect of assignees coming to Australia or domestic transfers. It does not apply in respect of employees on short term assignments out of Australia.
It is also unclear whether the proposed changes to the tax treatment of LAFHA from 1 July 2012 will have an impact on the above table.
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