FIFO travel and LAFHA: what you can and cannot claim

Ask a room of FIFO workers what they think their biggest deduction is, and a fair few will point to the travel: the drive to the airport, the flight to site, the weeks spent living away from home. It feels like it should count. You go a very long way to earn that money, often at your own inconvenience, and none of it looks like an ordinary nine-to-five. The tax office sees it differently, and the gap between what feels claimable and what actually is costs FIFO workers more than any other part of the return. This chapter works through the travel and the living-away allowance carefully, because it is the part people get wrong most, and the mistakes run in both directions.

The trip to site is a private commute

Getting from home to work is private, and for a FIFO worker the mine site is your regular place of work. So the drive to the airport, the flight to site, or the long haul up the highway to camp, all of it is the commute, and none of it is deductible. This holds no matter how far you live from the site and no matter what your roster looks like. Living a long way from your regular workplace does not change it, and neither does starting outside normal business hours. Distance and roster timing are simply not the test.

It stays private even where you pay for the flight yourself. The clearest way to see this is the ATO's own reasoning: a worker who lives in one state and takes a long-term project in another, flying there at his own expense, still cannot claim the travel, and cannot claim his accommodation and meals at the far end either, because that project site is his regular workplace and he chose to live away from home to work there. The money he spent getting there and staying there is private, the same as anyone's rent and commute. In most FIFO arrangements the question rarely arises anyway, because the employer pays for the flights, the camp room and the mess meals. Where the employer provides or pays for something, you have not incurred a cost, so there is nothing to claim regardless of how it is treated. Airport parking on the home leg is private for the same reason: it is part of getting to work.

One term causes a lot of confusion here. "Point of hire" is a concept your employer uses on their side of the ledger, in working out fringe benefits, and it does not turn any of your travel into a deduction. Being hired at, or bussed from, a nominated point does not make the trip to site claimable for you.

LAFHA: the biggest misconception

A living-away-from-home allowance, LAFHA for short, is where most FIFO returns come unstuck. It is not ordinary income and it is not a travel allowance. It is a fringe benefit, which means the tax on it is dealt with by your employer, not you. In your hands it is non-assessable non-exempt income, and that has a plain consequence: it does not go on your tax return at all, and you get no deduction for the accommodation or food it is meant to cover. Receiving a LAFHA creates exactly zero deductions for you.

This is the part that surprises people, because a large allowance sitting in your pay feels like it must connect to a claim. It does not. The ATO's own example is a worker on a twelve-month country project: his living-away allowance never appears on his income statement, and he cannot claim his accommodation and meals, because while he is living away those are private living expenses, the same as groceries and rent at home. The concession that reduces the taxable value of the allowance, for accommodation and a reasonable amount of food, is applied by the employer when they work out their fringe-benefits position. It is not something you claim, and it is not a deduction on your return.

LAFHA versus a travel allowance

The two allowances sound alike and are treated as opposites, so it is worth getting the line clear. A travel allowance is paid when you are genuinely travelling for work and have not relocated. It is assessable income, so it goes on your return, and against it you can claim the genuine work travel, meal and accommodation costs you actually incurred, provided you keep records. A LAFHA is paid when you are living away at a work location. It stays off your return and gives you no deduction. One is on the return with a matching claim, the other is off the return with nothing to claim.

For a FIFO worker at a distant but regular site, the arrangement is usually living-away rather than travelling, because you are not making a short trip and returning, you are based at the site for your roster. That is precisely why the food and accommodation there are private and not deductible. Mixing the two up, and treating a living-away arrangement as if it were work travel with claimable meals, is the single most common FIFO error. Keep them straight: travelling puts the allowance on your return and lets you claim real costs, living away takes the allowance off your return and gives you nothing to claim.

The travel that does count

None of this means work travel is never deductible. Genuine travel in the course of your duties, as distinct from commuting, does count. The situations that qualify are narrower than people expect, but they are real:

• Directly between two separate jobs on the same day, where neither of them is home. If you finish a shift operating a haul truck and drive straight to a second job that evening, that leg between the two workplaces is deductible.
• Between mine sites, or to an alternative workplace, for the same employer on the same day. A supervisor driving from one site to another during the day can claim the inter-site legs. The home-to-regular-site leg at either end stays private.
• From home directly to a training venue that is not your regular site, where the training is for your current work.
• Genuine overnight work travel, where your duties require you to sleep away from home at a location that is not your regular site, for example a short inspection trip of a few nights to another site. There you can claim the accommodation, meals and incidentals you actually pay for. If the employer provides the room and the meals, you have not incurred the cost, so there is nothing to claim.

There is also the narrow bulky-tools exception, where home-to-site travel can be deductible because you must carry essential, genuinely bulky equipment and there is no secure storage on site. That one is covered in the tools chapter, because it turns on the gear rather than the trip. Separately, if you receive a genuine travel allowance that is under the ATO's reasonable amount, is not shown on your income statement, and is fully spent, you can leave it off your return, but then you claim nothing against it. To actually claim your travel costs, you declare the allowance and keep your records.

The records to keep

For any travel you do claim, the paperwork is what carries it. Keep the receipts for what you spent, and keep a short note of why the trip was in the course of your duties rather than a commute, because that reason is exactly what separates a deductible leg from a private one. The overnight inspection trip, the drive between two sites, the run to a training venue: for each, hold the cost and the reason it counted. The allowance on your pay is never the proof of the expense. The free option for holding all of this is the ATO's own myDeductions app, which will store your receipts and log your trips.

The bottom line

The commute to site is private, however far it is and whoever pays for the flight. Anything a living-away allowance covers is off your return and buys you no deduction, because while you are living away your accommodation and meals are private living costs. What you can claim is genuine work travel: the legs between workplaces, the trip to training, the overnight travel where you actually pay your own way. Sort the travel into commute, living away, and genuine work travel, claim only the last, and the part of the FIFO return that trips up almost everyone stops tripping up you.

General information only, not tax advice. Check the ATO or a registered tax agent for your situation.