Treatment of Living Expenses for NHMRC overseas Early Career Fellowships (CJ Martin, Sidney Sax, Neil Hamilton Fairley, INSERM)

Background
The NHMRC has provided an allowance within the above mentioned ECF awards to support the living expenses of Fellows whilst they are undertaking the overseas component of their award. The allowance was intended to be a
living away from home allowance (LAFHA); defined as “an allowance the employer pays to employees to compensate for additional expenses incurred and any disadvantages suffered because the employee's duties of employment require them to live away from their normal residence”.

Advice
As a consequence of changes to rules and/or interpretations by the Australian
Taxation Office, this allowance is classified as a fringe benefit for tax
purposes and the Administering Institution would need to pay the allowance in
full without withholding any PAYG (or equivalent) tax and instead would need
to include the allowance on their annual FBT return. Monash has received advice that the treatment of living expenses for ECFs with an overseas component should be subject to FBT, and be treated as such.

Impact
The treatment of the living allowance by Monash as FBT has a significant
impact upon the costs currently met by Departments to support the overseas
component of an ECF. For a salary based upon a 2016 Level A, Step 03
appointment, a Department is currently supporting an overseas Fellow
$43,570 pa on their overseas component. As a consequence of the allowance being treated as FBT, the level of support would essentially double to $86,860 pa on their overseas component.

Considerations
Supervisors, HoD and HoS should consider the level of support you wish to
provide to an intending overseas NHMRC Fellowship applicants based upon a
financial commitment of $86,860pa, as well as being mindful that only 30 % of
these overseas Fellows return to Monash.