FIFO worker tax: the mistakes that cost the most

Technically reviewed 8 October 2026 · General information only, not personal advice. Read our disclaimer.

A lot of our clients are FIFO. Mining, construction, engineering, oil and gas. Mostly Western Australia, some Queensland and Northern Territory. They earn well, the rosters are demanding, and the tax bill at the end of the year is usually the second-biggest expense in their life after their mortgage.

The thing we see most often when a new FIFO client comes to us is a tax return from the previous year that has been done by a generalist accountant who doesn’t specialise in FIFO. Sometimes the return has overclaimed deductions that aren’t actually deductible, and the client is sitting on a quiet ATO data-matching risk they don’t know about. Sometimes the return has missed deductions or structural opportunities that would have made a real difference. Either way, there’s been money on the table, and the client didn’t know.

This piece is the conversation we have in the first meeting. The five mistakes we see most often, what the rule actually is, and what to do instead.

A note before we begin. Tax law on travel and work-related deductions for employees moved meaningfully with TR 2021/1 (and the broader ATO position on travel and accommodation). What was claimable five years ago might not be claimable today, and what your previous accountant did three years ago might not survive a current ATO review. Where rules have shifted, we’ve flagged it.

Mistake 1: Treating the flight from home to site as a deductible travel expense

This is the single most common overclaim we see, and it’s the one that catches a lot of FIFO workers off guard.

The rule is straightforward in principle: the cost of travelling between your home and your regular place of work is not deductible. The ATO classifies it as private travel (a commute), and the FIFO context doesn’t change the classification just because the work is far away or the travel is by plane rather than car.

Where this catches people: a worker on a regular roster, flying from Perth to a Pilbara site every fortnight, can feel intuitively that the flight should be deductible, it’s not a Sunday family trip, it’s the only way to get to work. But the tax law follows the structure (private travel between home and work), not the inconvenience. TR 2021/1 reinforced this position.

The exceptions are narrow. Travel between two separate workplaces in the same employment (going from a home office to a site, where the home is a place of business in its own right, not just a residence) can be deductible. Travel where your job requires you to carry bulky equipment and there is no secure place to leave it at the site can be deductible; choosing to carry your tools home is not enough. Travel that is genuinely part of the work itself, an itinerant worker moving between sites during the day, can be deductible; being paid while you sit on a plane is not, on its own, the test. And having a desk at home does not turn the home into a workplace for this purpose. Most FIFO workers don’t fall within any of these.

What we do instead: we make sure the genuine deductions for the year are claimed properly, and we run the structural conversation about whether there are LAFHA or salary-sacrifice arrangements available through the employer that achieve a similar economic outcome via a different mechanism. More on that below.

Mistake 2: Confusing LAFHA with a travel allowance

LAFHA, Living Away From Home Allowance, is paid by some employers to FIFO workers to compensate for the cost of accommodation and food while away from home for work. It is not the same as a travel allowance, and the tax treatment is materially different.

A travel allowance (paid for short business trips where you’re still based at your usual home) is included in your assessable income, and you can claim deductions against it for actual expenses incurred. LAFHA, by contrast, is a fringe benefit paid by the employer, taxed under the Fringe Benefits Tax Assessment Act 1986. Where LAFHA is correctly structured, the employee doesn’t include it in their assessable income, and the employer manages the FBT outcome through specific concessional rules. The ATO’s view on travel versus living away from home sits in TR 2021/4, and on the home-to-work commute in TR 2021/1. One boundary of our own: we advise on the tax consequences of super contributions, salary packaging and the like; a recommendation about a particular super fund or financial product is licensed financial advice, which is a different conversation with a different adviser.

The mistake we see is workers receiving a payment from their employer that’s labelled “LAFHA” on the payslip but treated as a travel allowance on the tax return, or the reverse. The treatment depends on what the payment actually is, not what it’s been called. Getting this right requires reading the employment agreement, the payslip categorisation, and (sometimes) ringing the employer’s payroll team. It’s the kind of thing a generalist accountant might glance over and a FIFO specialist will dig into.

Three practical details on LAFHA worth knowing. First, the employee has to give the employer a Living Away From Home declaration to access the concessional FBT treatment, without it, the LAFHA can lose its concessional status. Second, the FBTAA subtracts a statutory food amount ($42 per week per adult, $21 per week per child) from the exempt food component, so the apparent “exempt” allowance is smaller than the headline figure. Third, the standard 12-month limit on the concession at a particular work location does not apply where the arrangement meets the FBT law’s own definition of fly-in fly-out or drive-in drive-out work; not every roster labelled FIFO does, so the conditions are checked against the actual arrangement. Workers who’ve been told their LAFHA “expires” after a year sometimes have it wrong.

What we do instead: we read the actual classification of every component of the FIFO worker’s pay before lodging anything. If the LAFHA is being mishandled, fixing it for the current year and (where appropriate) amending prior-year returns can be worth thousands.

Mistake 3: Claiming meals when the entitlement isn’t there

Meal claims for FIFO workers depend on whether the employer is providing meals on site (most do, some don’t), what allowance has been paid, and what the worker actually spent.

Where the employer provides meals on site, the worker isn’t out of pocket and there’s nothing to claim. Where the employer pays a meal allowance and the worker has eaten the company-provided meals anyway, the allowance has to be declared as income but no deduction is available without actual out-of-pocket expense. Where the worker has spent their own money on food (rare in modern FIFO arrangements but it happens), the allowance does not by itself make the meals deductible. The question is whether the worker was travelling on work at the time or living away from home; ordinary living costs while living away from home are private. Where a deduction does exist, the ATO’s reasonable amounts only relax the substantiation, they do not create the deduction. TR 2021/4 is the ruling that draws these lines.

The trap we see: workers claiming a generic “meals” deduction based on the per-day allowance without thinking about whether they actually spent the money. The ATO’s reasonable amounts table (currently TD 2026/4 for the 2026-27 income year) gives a substantiation-free amount for meals when travelling, but it doesn’t mean the deduction is automatic. The expense still needs to have been incurred.

What we do instead: for each FIFO client, we confirm what the employer actually provides, what the allowance structure is, and only then do we work out what’s claimable.

Mistake 4: Missing the home-office and phone deduction (or claiming it too aggressively)

FIFO workers often do meaningful work-related activity from home. Compliance training modules, incident reports, emails to supervisors, the occasional document the role requires. The work-from-home (WFH) deduction is available for actual time spent on work activities at home, and the phone and internet deductions are available for the work-related percentage of those bills.

The two errors we see at opposite ends of the spectrum:

• Underclaiming. Workers who do real work at home but don’t keep any record of it and so claim nothing. The administrative cost of keeping a basic log is small; the deduction over a year is meaningful.
• Overclaiming. Workers (or their accountants) using a flat percentage that doesn’t reflect actual usage, or claiming personal phone use at the work-related rate. The fixed-rate WFH method has substantiation rules that need to be followed (per PCG 2023/1). One trap: if you use the fixed-rate method, phone and internet costs are already included in the cents-per-hour rate, you can’t double-claim them separately.

What we do instead: a quick conversation about what the worker actually does at home for work, in what hours, on which devices. Then we apply the right method (fixed-rate or actual cost) and the substantiation that goes with it. It’s usually a 15-minute conversation that adds a real number to the return.

Mistake 5: Treating self-education as automatically deductible

A course does not become deductible just because it is good for your career. We look at how it connects with the work earning your income now. Improving your skills in that work can be deductible; qualifying for a different occupation generally is not. A promotion, by itself, does not answer the question either way.

The classic FIFO trap: a worker pays for a ticket or qualification that they think will help them progress (a step up to supervisor, a different trade, a transition to a different industry). If the qualification is really about opening a new income-earning activity rather than improving how you earn your current income, it’s not deductible, even if it’s directly career-related; advancement within the same work is a different question, and often a closer call. (The ATO’s current view is in TR 2024/3, which replaced TR 98/9: the test is whether the study has a sufficient connection with how you earn your income now. One small administrative change worth knowing, the historic $250 reduction on self-education expenses was repealed effective 1 July 2022, so the full deductible amount is now claimable from the first dollar.)

What we do instead: before claiming a self-education expense, we confirm with the worker exactly what the course is, what role they’re currently in, and whether the course is a current-role improvement or a stepping-stone to something else.

The structural conversation most FIFO workers haven’t had

The five mistakes above are about the return for the year. There’s a separate conversation that’s about the structure underneath, and that’s where the real money sits for high-earning FIFO workers.

• Concessional super contributions, using the full annual cap ($32,500 for 2026-27 under s 291-20 ITAA 1997, up from $30,000 in 2025-26, plus any unused carry-forward from the prior 5 years where total super balance was under $500,000 at 30 June of the prior year) is one of the cleanest ways to reduce assessable income for a high-earning year.
• Spouse super contribution splitting, for couples where one partner is significantly higher-earning, splitting concessional contributions can help equalise super balances over time and unlock other planning.
• Salary packaging arrangements through the employer, particularly for novated leases, work-related items, and FBT-exempt benefits available in remote-area employment.
• Property purchase timing and structure, for FIFO workers buying investment property, the structure (own name, partnership, trust) affects deductibility, asset protection, and eventual CGT outcomes. The decision should be made before the contract is signed, not after.
• Income smoothing across financial years, where rosters fall across financial years, the timing of bonus payments, leave loading, and discretionary employer payments can sometimes be managed to avoid pushing into the highest marginal bracket in one year.

The structural moves are where the real difference is made. They have to be made before the year is finished, not after.

What we do for FIFO clients

The first thing we do with a new FIFO client is read last year’s return start to finish and tell them what we would have done differently, with reasons. Sometimes that means amending the return. Sometimes it means a structural recommendation for next year. Always it means the conversation about what’s actually claimable, what isn’t, and what to do about the things sitting in the structural layer.

If you’re a FIFO worker and your accountant doesn’t specialise in this work, you’re probably leaving money on the table, or you’re sitting on an overclaim risk you don’t know about. Either way, the conversation is worth having.

If you’d like a second pair of eyes on your situation, ring us. We run a lot of these reviews and they’re some of the most rewarding work we do, the gap between a generalist FIFO return and a specialist one is usually larger than the client expects.

Raise higher.