Australia is a big country, meaning moves — interstate, between cities and from elsewhere in the world — for work are common. There are a number of ways you can save money throughout the relocation process, provided you plan correctly. Pay@bility can assist by managing the salary packaging of relocation expenses to obtain tax savings.
Relocation and tax
When an employee is required to relocate for either a new or existing position, the costs associated with that relocation become exempt from Fringe Benefit Tax (FBT). This applies when moving from one city to another, to another state or from another country. Costs incurred which are exempt include:
- Attending the interview.
- Relocation consultants.
- Removal and storage of household items.
- Certain home purchase and sale costs.
- Connection or reconnection of utilities.
- Furniture rental.
Settling-in allowance
Many companies offer employees a settling-in allowance to cover some of the costs associated with moving and relocating.
In many instances this does not directly cover the costs of moving, such as commission on the sale of your current home and the stamp duty on your new home. Both costs are significant and can instead be packaged, allowing employees to save the tax on the costs which are not covered by the settling-in allowance.
Costs of the interview
Any costs incurred by the employee to attend an interview for a job requiring the employee to relocate can be packaged or provided by the employer as FBT exempt. These costs include meals, accommodation, flights and fuel, as well as any other related travel expenses such as taxi fares.
Relocation consultants
Relocation consultant costs incurred solely to assist the employee in relocating to perform their new role, either temporarily or permanently, are exempt from FBT. These costs include obtaining removalist quotes, lease negotiations and providing other information to assist the employee in settling-in to their new home town or city.
Removal and storage costs
Costs incurred by an employee in moving their household furniture and the temporary storage of that furniture is exempt from FBT. These costs include packing, transport, insurance, temporary storage and unpacking.
Home sale costs
If you’re required to relocate for work and sell your home within two years of the move, the costs associated with the sale of the home are exempt from FBT. These costs include agent fees, stamp duty, legal fees, mortgage discharge and advertising.
Costs associated with buying a new home
If you buy a new home within four years of relocating, the costs incurred for the purchase of that new home are exempt from FBT. These costs include stamp duty, legal fees, borrowing costs and utility connections.
Be aware that you must be able to prove that the home was acquired as a result of being required to relocate. If you owned a property at the time of the relocation it must have been sold within two years of the relocation date.
Salary packaging
There are many more financial benefits associated with relocation, and proper planning will help maximise these. Pay@bility can help you navigate the specific rules for claiming deductions and set up a customised packaging plan tailored to you.
