An industry body says new limits on tax concessions for Living Away From Home Allowances (LAFHA) are making rural construction projects more expensive, and placing a hefty burden on business.

The Air Conditioning and Mechanical Contractors Association (AMCA) says prices have gone up throughout the industry, and along the supply chain as well.

In a letter to Federal Treasurer Joe Hockey and Federal Employment Minister Eric Abetz, AMCA executive director Sumit Oberoi says the changes restrict fringe benefits tax (FBT) treatment for food and accommodation allowances. The change applies to workers who own or rent a home within Australia and who can prove all their accommodation expenses and expenses relating to food and drink beyond a set tax office level.

Oberoi says the new rules increase various costs for businesses. In his an example of a Victorian business on a project outside a major population area, he said AMCA estimates the new rules add on average around $280,117 to normal costs.

“The cost implications of these legislative changes are already being felt, and will increasingly impact on tendering and project costs going forward, affecting the entire supply chain from the sub-contractors, the builders and those that they engage to work on the projects,” Oberoi said.

“Further, the changes provide a disincentive to train and utilise apprentices — clearly in contra to the intent of the legislation and the future of the industry.”

He says limiting the concession to homeowners and renters will disincentivise employers to hire apprentices for such projects.

AMCA has proposed the formation of an whole-of-industry group to negotiate the broad changes with federal ministers. The group would include AMCA itself, Australian Construction Industry Forum, Australian Constructors Association, Master Builders’ Association, National Electrical and Communications Association, National Fire Industry Association and Master Plumbers and Mechanical Services Association of Australia.