If you process LAFHA (Living Away From Home Allowance) for your employees, you'll need to manage this manually in the system.
Set Up LAFHA
To set up LAFHA:
Create pay items which are non-taxable and not included in super (eg LAFHA - Food, LAFHA - Rent).
Follow the usual process to submit, approve, and finalise timesheets.
In Process Payroll, expand the employee pay and manually add the pay items that you have created for LAFHA. Each item that you add will appear in a separate line with a value of $0.00.
Manually adjust the base pay and superannuation to account for the LAFHA payments.
Manually adjust the tax based on the new base and superannuation amounts.
Employee A earns $2000.00 in a week and $180.00 of superannuation (if we assume 9% as the superannuation percentage). They are taxed $539.00.
They pay $300.00 in rent and $150.00 in food each week to live away from home (total = $450.00).
The taxable wages including superannuation are $2180.00 - $450.00 = $1730.00.
Removing the superannuation component (9%) leaves a base amount of $1587.15.
As per the screenshot below, you would amend the hourly rate to $39.6788 (ie base / hours worked).
The hourly rate is amended because the total amount payable can’t be. You would then amend:
- the superannuation to be the standard percentage of $1587.15 (eg 9% = $142.85)
- the tax amount to be $380.00 (the correct tax amount for wages of $1587.00)
To check that this is correct, add:
- $1587.15 (Base)
- $450.00 (LAFHA)
- $142.85 (Super)
This totals $2180.00 which was the total package payable to them before the calculation started.