I have recently been sent interstate to work for 4 months at another site on secondment. Flights to and from the site are provided as well as a furnished apartment, and a rental car for the duration. The company agreed to pay me the meals portion of my Living Away From Home Allowance (LAFHA) ($236 a week). They then deducted that amount from my salary each week (seen as a deduction on my payslip, thus reducing my taxable income) and then pay it back to me tax free. My accountant has told me that the Living Away From Home Allowance is just that, an allowance, not a tax deduction, that should be paid on top of your normal salary should your work agree to pay it to you. I also consulted the ATO and although no one would provide any real advice due to legal reasons, they also said to me that receiving the allowance should not result in any deduction in my usual salary. Are my employer's doing the wrong thing by paying the Living Away From Home Allowance to me this way and deducting the amount from my usual salary? When I queried them on it, they said they do it that way because the Living Away From Home Allowance is tax exempt. But the Living Away From Home Allowance being exempt from tax doesn't mean that it reduces my taxable income in this instance does it?