Hi ,
Now i am probably going to sound like a really dumb blonde in asking this question , but here goes,
Hubby has been offered a 457 sponsorship visa, now we are in the process of getting all the paperwork together, but i dont want to commit to anything until i know most of the facts etc on the 457 and the LAFHA
so here goes, if say hubby is on $55,000 per annum and we can get LAFHA on renting and food allowance now does this mean hubby will get extra in his wage packet each week or not is basically what i want to know! sorry bit blunt but thats what we need to know. We are a family of 6, me , hubby and 4 kids all under 10 , so a yes to this question would be a real +++ for us
You CAN NOT have LAFHA if you buy a house or apply for PR.
You DO NOT need to have another home (say a house in the UK) to be able to get LAFHA.
You CAN HAVE LAFHA for the entire duration of your TEMPORARY VISA.
LAFHA is recognised by the ATO but is NOT a right, it must be offered (and administered) by the employer.
You should ask your prospective employer for it in advance, and preferably have it stated in the contract.
There are two elements to LAFHA:
1) House Rental. Your rent for accommodation is covered out of BEFORE TAX income and there is no other tax (such as Fringe Benefits Tax to pay).
Example: Annual income $70,000 (before Super); Annual Rent $20,000
Your rent is TAX FREE.
NET MONTHLY INCOME without LAFHA = $4383
NET MONTHLY INCOME WITH LAFHA = $4908
So $6000 a year better off in this example.
You tell your employer how much your rent (give them rental agreement) is and they adjust your NET pay accordingly.
2) Food allowance. There is a food allowance which is a FIXED amount that depends on the number of people in your family. Your ACTUAL food costs are irrelevant. Allowance is $42 per adult per week and $21 per child per week. This (I'm fairly sure) is income tax free and FBT free; that is it is not taxed.
Using same income info from above and assuming just two adults, the EXTRA income is (42*2adults*52 weeks) or $4368 year or $364/month.
So with LAFHA take home pay is now $4908+364= $5272/month.
Compared to WITHOUT LAFHA income of $4383 then you would be $889 NET a month better off.
Put it another way, your $70,000 annual salary WITH LAFHA provides a net monthly income equivalent to an annual salary of $87,500 WITHOUT LAFHA
__________________
I wanna get outta this place, if its the last thing i ever do!!:wubclub:
You CAN NOT have LAFHA if you buy a house or apply for PR.
You DO NOT need to have another home (say a house in the UK) to be able to get LAFHA.
You CAN HAVE LAFHA for the entire duration of your TEMPORARY VISA.
LAFHA is recognised by the ATO but is NOT a right, it must be offered (and administered) by the employer.
You should ask your prospective employer for it in advance, and preferably have it stated in the contract.
There are two elements to LAFHA:
1) House Rental. Your rent for accommodation is covered out of BEFORE TAX income and there is no other tax (such as Fringe Benefits Tax to pay).
Example: Annual income $70,000 (before Super); Annual Rent $20,000
Your rent is TAX FREE.
NET MONTHLY INCOME without LAFHA = $4383
NET MONTHLY INCOME WITH LAFHA = $4908
So $6000 a year better off in this example.
You tell your employer how much your rent (give them rental agreement) is and they adjust your NET pay accordingly.
2) Food allowance. There is a food allowance which is a FIXED amount that depends on the number of people in your family. Your ACTUAL food costs are irrelevant. Allowance is $42 per adult per week and $21 per child per week. This (I'm fairly sure) is income tax free and FBT free; that is it is not taxed.
Using same income info from above and assuming just two adults, the EXTRA income is (42*2adults*52 weeks) or $4368 year or $364/month.
So with LAFHA take home pay is now $4908+364= $5272/month.
Compared to WITHOUT LAFHA income of $4383 then you would be $889 NET a month better off.
Put it another way, your $70,000 annual salary WITH LAFHA provides a net monthly income equivalent to an annual salary of $87,500 WITHOUT LAFHA
Hiya leanne,
i also did a search and found this, and to me it looks like you do get extra in your wage packet each week, but the last bit confused me ,
"Put it another way, your $70,000 annual salary WITH LAFHA provides a net monthly income equivalent to an annual salary of $87,500 WITHOUT LAFHA "
can you see what i mean or am i just having a dumb blonde moment is that $87,500 with LAFHA or without as the last 2 words say
sorry if i am having a thick moment, i havent been in the workforce for 20yrs , been a stay at home mum so this has made me a bit brain dead concerning income etc etc but can tell you what the latest toys are and kiddies programme,
thats why i said plainly , yes or no
The way i see it is YES , you get extra every month because you are taxed less and you get $650 ish dollars for food allowance. (2 adults 4 kids) I think thats right.
__________________
I wanna get outta this place, if its the last thing i ever do!!:wubclub:
The way i see it is YES , you get extra every month because you are taxed less and you get $650 ish dollars for food allowance. (2 adults 4 kids) I think thats right.
Hiya
i just found this for the food allowance , and it looks like we would get $493 per week which = $1972 per mth
which if i have worked it out correctly would =$ 23,664 per annum
this is the food allowance alone , can you see where i am coming from in terms of claiming the LAFHA,
with rental on the LAFHA as well this would help us no end , i have been looking at properties in winston hills and baulkham hills area and the rental would cost us around about $500 to $600 a week so if we can claim this as well this would be of great benefit also
THe LAFHA is a tax allowance, and different companies pay LAFHA in different ways. My company makes a $500 tax allowance each week, but bottom line is your salary is the same but you are taxed less so therefore take home more.
make sure it is made as part of the job offer otherwise you won't get it as it is an offered allowance by the company and lots of them don't offer it as it means basically more work for them. We thought we would be able to claim it ourselves but it has to go via the employer, luckily OH's employer offered it to us and it does help to pay less tax to the lovely tax man eerrrrr
i just found this for the food allowance , and it looks like we would get $493 per week which = $1972 per mth
which if i have worked it out correctly would =$ 23,664 per annum
this is the food allowance alone , can you see where i am coming from in terms of claiming the LAFHA,
G'day Michell
The issue of LAFHA confuses a number of people and you need to be careful that you don't get the wrong impression.
Firstly and perhaps most importantly, LAFHA is not an allowance from the tax man. It is something your employer may choose to give in return for lower wages. It is entirely at your employers discretion if he choses to do so because it can increase his paperwork and even potentially create a tax liability for your employer. As a general rule, it's more likely a larger company may agree to a LAFHA allowance than a smaller one. i.e. it's often easier when you're doing it for 30 people than for one.
Secondly, unless the LAFHA is negotiated and agreed before any employment contract is signed or your sponsorship application is submitted, you probably will not be able to get one.
Thirdly, a LAFHA does not mean that your employer pays you any more, rather the employer pays you LESS but then gives you the same amount back as a LAFHA. You end up better off because you don't pay tax on the LAFHA as long as it is below the tax thresholds you found on the ATO site.
So as an example, lets say that a potential employer would be happy to sponsor your hubby and pay him a salary of $55,000. If the employer and your hubby agree, the employer can reduce your hubby's wages to $50,000 plus pay him a LAFHA of $5,000. This will still cost the employer $55,000 but your hubby will be better off because he will not pay tax on the $5,000. He will be better off by 30% (his tax rate on $50,000) so a LAFHA of $5,000 means he will get an extra $1,500 per year or about $30/week in his pocket.
Paying superannuation is a legal requirement for all employers in Australia. This is paid on top of your hubbys salary, it is not part of it. Superannuation is paid at the rate of 9% of salary - this goes into a superannuation account (pension fund) and you can not get this till you leave the country or retire. If your hubby is on a salary of $55,000 his employer MUST pay $4,950/yr into an approved super fund. If your hubby agress to a LAFHA allowance of $5,000, hence reduces his salary to $50,000 then the employer MUST pay superannuation of $4,500 into an approved super fund.
So, in this example, the LAFHA will initially put an extra $1,500/yr into your hubby's pocket but $450/yr less will be paid into his super fund. Nevertheless, the LAFHA does mean you end up with more in your pocket.
So, the next question is, well why not reduce the salary to $30,000 and have a LAFHA of $25,000? The simple answer is, the immigration act specifies a minimum salary that must be paid (it varies a bit with type of job and if it's regional or city based).
The minimum salary that can be currently paid to IT people is $57,300 and to non IT people $41,850. In regional areas it's $51,570 or $37,665. These amounts are adjusted annually and usually around August.
So Michell, going back to your example, if your hubby works in IT he can not be employed for $55,000/yr. The sponsor will have to increase the offer to at least $57,300. If he doesn't work in IT then an offer of $55,000/yr is okay and by negotiation your hubby and employer could agree, before signing and paperwork to accept a salary of $41,850 and a LAFHA of $13,150. Doing so would mean about an extra $75 in his pocket each week but about $23 less paid into his super fund each week.
Just one final observation, $55,000 is not a particularly good salary to support a family of 6 people, especially as being temporary residents you have to pay more for many services. If you were permanent residents, you would be eligible for some fairly substantial assistance including family tax benefits, rent subsidies and low income support. I would suggest that you will probably need to be working close to full time to bring in enough money to supplement your hubby's income for a relatively comfortable lifestyle.
Still many of the best things in life are free and a couple of years in a "tight" situation may be a small price to pay for eventually getting Oz citizenship.
The issue of LAFHA confuses a number of people and you need to be careful that you don't get the wrong impression.
Firstly and perhaps most importantly, LAFHA is not an allowance from the tax man. It is something your employer may choose to give in return for lower wages. It is entirely at your employers discretion if he choses to do so because it can increase his paperwork and even potentially create a tax liability for your employer. As a general rule, it's more likely a larger company may agree to a LAFHA allowance than a smaller one. i.e. it's often easier when you're doing it for 30 people than for one.
Secondly, unless the LAFHA is negotiated and agreed before any employment contract is signed or your sponsorship application is submitted, you probably will not be able to get one.
Thirdly, a LAFHA does not mean that your employer pays you any more, rather the employer pays you LESS but then gives you the same amount back as a LAFHA. You end up better off because you don't pay tax on the LAFHA as long as it is below the tax thresholds you found on the ATO site.
So as an example, lets say that a potential employer would be happy to sponsor your hubby and pay him a salary of $55,000. If the employer and your hubby agree, the employer can reduce your hubby's wages to $50,000 plus pay him a LAFHA of $5,000. This will still cost the employer $55,000 but your hubby will be better off because he will not pay tax on the $5,000. He will be better off by 30% (his tax rate on $50,000) so a LAFHA of $5,000 means he will get an extra $1,500 per year or about $30/week in his pocket.
Paying superannuation is a legal requirement for all employers in Australia. This is paid on top of your hubbys salary, it is not part of it. Superannuation is paid at the rate of 9% of salary - this goes into a superannuation account (pension fund) and you can not get this till you leave the country or retire. If your hubby is on a salary of $55,000 his employer MUST pay $4,950/yr into an approved super fund. If your hubby agress to a LAFHA allowance of $5,000, hence reduces his salary to $50,000 then the employer MUST pay superannuation of $4,500 into an approved super fund.
So, in this example, the LAFHA will initially put an extra $1,500/yr into your hubby's pocket but $450/yr less will be paid into his super fund. Nevertheless, the LAFHA does mean you end up with more in your pocket.
So, the next question is, well why not reduce the salary to $30,000 and have a LAFHA of $25,000? The simple answer is, the immigration act specifies a minimum salary that must be paid (it varies a bit with type of job and if it's regional or city based).
The minimum salary that can be currently paid to IT people is $57,300 and to non IT people $41,850. In regional areas it's $51,570 or $37,665. These amounts are adjusted annually and usually around August.
So Michell, going back to your example, if your hubby works in IT he can not be employed for $55,000/yr. The sponsor will have to increase the offer to at least $57,300. If he doesn't work in IT then an offer of $55,000/yr is okay and by negotiation your hubby and employer could agree, before signing and paperwork to accept a salary of $41,850 and a LAFHA of $13,150. Doing so would mean about an extra $75 in his pocket each week but about $23 less paid into his super fund each week.
Just one final observation, $55,000 is not a particularly good salary to support a family of 6 people, especially as being temporary residents you have to pay more for many services. If you were permanent residents, you would be eligible for some fairly substantial assistance including family tax benefits, rent subsidies and low income support. I would suggest that you will probably need to be working close to full time to bring in enough money to supplement your hubby's income for a relatively comfortable lifestyle.
Still many of the best things in life are free and a couple of years in a "tight" situation may be a small price to pay for eventually getting Oz citizenship.
Hi Bob
thank you so much for that great explanation, i actually understood everything you put , my husband is as you pointed out not an IT worker, he is a fire alarm technician, so this answers one of your queries, secondly you mention on a PR visa we can get some other assistance, but i thought we was not eligable for these for a minimum of 2 yrs , i had read somewhere that you have to have been a PR for a minimum of 2 yrs before you can claim anything eg family tax benefits etc, if this is the case and say we become PR before the 2 yrs is up i.e his employer applies for ENS can we still claim these if we have been on a temp visa,or do we have to wait another 2 yrs after we become PR, sorry to ask so many questions, at the moment we are trying to sell our house so we have some equity to tide us over for a minimum of 2yrs this is why i am trying to find out as much as possible about the finance side of things , at the moment i am also looking into school fees in NSW which is around $4500 each child per yr ,but have been told if they go to Catholic school that you only pay the fees they quote which is about $1100 per yr , and then each subsequent child in the school is given a reduction resulting in if you have 4 children in the school then the last child is free, but i have so many conflicting answers to this i seem to be going around in circles, i have E-mailed a catholic school in the Hills area but have had no reply as yet.
If this is the case and it is true then i think we will go for catholic school, not because it is cheaper but hubby is catholic and so are my in laws so they would be very pleased about this, and instead of it costing us $18000 per yr for the 4 it would cost us about $4/5k per yr which would be a saving of about $12/13k which as you would see would help us out a lot .
anyways sorry to have gone on and thank you so much for you great understandable post,
kind regards
michell
p.s thank you also to other poster as well for all your kind input
