FIFO workers - How to maximise your tax position

If you’re a fly-in fly-out (FIFO) worker in Australia, whether on a remote mine site or an offshore oil and gas rig, your unique working arrangements can significantly impact your tax situation. With complex pay structures, allowances, and time away from home, managing your taxes can get tricky. But with the right advice, you can maximise your return and keep more in your pocket.

North Advisory, a specialist accounting firm on Sydney’s north shore, is keen to assist individuals working in a FIFO environment. In this article, we unpack the key considerations for your unique situation.

Even if you work in a remote location, you’re still an Australian resident for tax purposes if your permanent home is in Australia. This means you’re taxed on your worldwide income. However, if you spend extended periods working overseas, you may need to consider whether you also have any tax obligations in the foreign country.

If you’re unsure, the Australian Taxation Office (ATO) provides residency tests, and an accountant can help clarify your status to ensure you’re meeting your obligations while minimising unnecessary tax payments.

FIFO workers incur plenty of costs that can be deductible during tax time. The key is ensuring that these expenses are directly related to your job and that you keep good records. For example, common deductions include:

• Protective clothing and equipment—If your employer doesn’t provide items like steel-capped boots, high-visibility clothing, gloves, or safety glasses, you can usually claim them.
• Self-education expenses – If you undertake training or courses to maintain or improve your skills for your current role, these can be deductible.
• Union fees and professional memberships—Many FIFO workers are members of unions or industry bodies, and these fees can be claimed.
• Tools and equipment – If you need specific tools or devices for work (that aren’t reimbursed), they could be tax-deductible.
• Home office expenses – If you’re required to complete work-related admin tasks at home, you can claim a portion of your electricity, internet, and office supplies.

FIFO workers often get their flights and accommodation paid for by their employer, but in cases where you pay out of pocket, you may be able to claim a deduction. Flights to and from site – If these are employer-paid, you can’t claim them.

However, if you foot the bill for some travel, such as relocating between different sites or attending work-related training, these might be deductible. Some FIFO workers receive a living away from home allowance (LAFHA), which is tax-effective.

You may be able to claim if you’re not receiving an allowance and pay for meals during work-related travel. If you’re required to stay in short-term accommodation before heading to the site and your employer doesn’t reimburse you, this could be a claimable expense.
Staying on top of your records. Keeping accurate records is the foundation of optimising your tax return. Here are some simple ways to stay organised:

• Use a cloud-based expense tracker or accounting app.
• Keep digital copies of receipts (photos are fine).
• Maintain a travel diary if you claim travel-related expenses.
• File your payslips and group certificates in one place. The better your records, the more you can claim—and the easier tax time becomes.

FIFO workers often get their flights and accommodation paid for by their employer, but in cases where you pay out of pocket, you may be able to claim a deduction. Flights to and from site – If these are employer-paid, you can’t claim them.

However, if you foot the bill for some travel, such as relocating between different sites or attending work-related training, these might be deductible. Some FIFO workers receive a living away from home allowance (LAFHA), which is tax-effective.

You may be able to claim if you’re not receiving an allowance and pay for meals during work-related travel. If you’re required to stay in short-term accommodation before heading to the site and your employer doesn’t reimburse you, this could be a claimable expense.

Staying on top of your records. Keeping accurate records is the foundation of optimising your tax return. Here are some simple ways to stay organised:

• Use a cloud-based expense tracker or accounting app.
• Keep digital copies of receipts (photos are fine).
• Maintain a travel diary if you claim travel-related expenses.
• File your payslips and group certificates in one place. The better your records, the more you can claim—and the easier tax time becomes.

FIFO workers often receive unique allowances. Understanding how these allowances are taxed is important, so we highly recommend seeking professional tax advice.

• Living away from home allowance (LAFHA) – This is designed to compensate for additional costs when working away. It can be tax-free under certain conditions, but strict rules apply.
• Remote area allowances – Some remote area payments may have concessional tax treatment.
• Overtime and shift allowances are usually taxable at your marginal rate, so it’s important to factor them in when planning your tax strategy.

Many FIFO workers earn high incomes, which can make superannuation a powerful wealth-building tool. A few tips:

• Salary sacrifice – Contributing extra to super before tax can reduce your taxable income and help grow your retirement savings.
• Spouse contributions – If your partner earns a lower income, contributing to their super could earn you a tax offset.
• Government co-contributions – If your income is within certain thresholds, you might be eligible for a government top-up on personal super contributions.

Depending on your circumstances, you may be eligible for various tax offsets; for example, If your usual residence is in a remote area, you may qualify for a tax offset to reduce your overall tax liability. If you have private hospital cover, you could avoid the Medicare Levy Surcharge, which applies to higher-income earners.

With high incomes and large swings in earnings, FIFO workers can sometimes face hefty tax bills. To avoid surprises:

• Set aside tax regularly – If you receive large overtime payments or bonuses, setting aside extra tax can prevent a nasty shock at tax time.
• PAYG variations – If you know you’re going to have significant deductions, an accountant can help adjust your withholding tax so you’re not overpaying throughout the year.
• Lodge on time – Missing deadlines can result in penalties, so make sure you stay on top of your tax lodgements.

As a FIFO worker, you work hard for your income and deserve to make the most of it. The key to minimising tax is knowing what you can claim and planning ahead. Keeping good records, understanding your entitlements, and working with a tax professional can help you maximise your return and ensure you’re not paying more tax than necessary.

If you want tailored advice on your FIFO tax situation, contact an experienced accountant who understands the unique challenges of FIFO work. A little planning now can save you thousands in the long run!