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LAFHA announcement in the budget ?

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My employer (along with others) is meeting with ATO later today and will be "issuing a statement later."


22/02/11 First employer interview - 06/04/11 Second employer Interview - 13/05/11 Offer of employment - 05/06/11 Documentation submitted - 08/06/11 457 Visa application lodged. 28/06/11 - Applicant Approved 27/08/11 - Arrived Sydney, NSW.

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still waiting to hear from the treasury but just got this email which doesn't sound good.....ginger:arghh:

 

I am sorry but it seems that the good news may have beenpremature. Don’t panic yet. It seems that no one is really sure as to what’shappening but On Core (the people whom you pay for LAFHA) and in contact withthe Treasury department as to the finer details of the issue.

As Jeff explained it to me, there are many people disputinginterpretations of the ruling (including KPMG – a large renown Gold Coastaccounting company) who are all in contact with the Treasury department as theyhad the same interpretation of the ruling.

This doesn’t mean that you definitely don’t quality for LAFHA, it just meansthat they don’t know yet. I asked him when he expects to hear more, and hesaid that he is hoping to hear something early next week but the unfortunatething is that you’re waiting on the government and they don’t act quickly.

I am sorry to bring you bad news but it might still be okay,it’s just that they’re not sure yet. L

 

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That old saying about p*ss ups and breweries certainly comes to mind. Thanks for posting ginger. I'm getting to the point that I actually feel like going home now anyway - just don't have the cash to go!

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this was sent to me from my accountant yesterday afternoon

 

Also announced in the budget last night was the timing of the changes. Anyone receiving LAFHA under an agreement enter into prior to 7.30pm (AEST) on 8 May 2012 will continue to access the current rules until 1 July 2014. From 1 July 2014 the new rules will apply. Anyone entering into an agreement to receive a LAFHA after 7.30pm (AEST) on 8 May 2012 will be subject to the new rules from 1 July 2012.

 

As yet we still have not seen any draft legislation and thus can not provide any advice as to the actual details of the changes. Suffice to say that if you are currently receiving a LAFHA you can expect the benefit to be removed at 1 July 2014

 

I'm inclined to believe him until there is any formal announcement otherwise.

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That old saying about p*ss ups and breweries certainly comes to mind. Thanks for posting ginger. I'm getting to the point that I actually feel like going home now anyway - just don't have the cash to go!

 

 

As I mentioned above, your employer has to pay for flights if you do go back (have to request them in writing or somesuch, details are on the immi website 457 pages). So that's a big chunk of going back already paid for.

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Guest Olibear
I have just spoken with OnCore who deal with my LAFHA and they have confirmed it's business as usual. They have a sector that specialises in this. They are still in talks with the treasury etc.. but he was happy to state that it will continue until 2014. Only Australians will be allowed to apply for it from now on though (well people who maintain a home here)

 

I hope for all our sake's you're right but this sounds like it is contradicting the information we have recieved from our industry group who is meeting with the Federal Treasury this week.

 

I have 3 kids to support which is already harder here than I thought.

 

And I thought 2 was hard enough.

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Guest ctowna

Hey guys, just found this site and thread from a google search. Wanted to share some knowledge:

 

I know the person who wrote a good portion of the following article and it came from discussions with Rebecca Fanning at the Treasury Department last night.

 

Source: http://www.mumsgone2aus.com/2012/05/10/breaking-news-lafha-budget-update-2012-2013/

 

The most important part is below:

 

"The reason many of us misunderstood the recent budget announcement is because delaying the implementation of the LAFHA reform for overseas temporary residents already living and working in Australia makes sense. We were hoping for sensible transition steps; giving existing “arrangements” a two year reprieve is a good idea.

Mum has spoken with a representative from the Treasury and unfortunately there appear to be no plans (or specific transitional arrangements) to make the implementation of the LAFHA reform easier on overseas temporary residents. The 1st July 2012 date stands and whilst there will be a further consultation paper, to be released next week, it is expected that this paper will cover the technical tax detail of the implementation rather than the broader concerns of the temporary resident workforce.

 

From the Treasury’s perspective employers and employees have had notice of the reform since November 2011 and should be prepared for the 1st July implementation."

 

:arghh:

 

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Guest ctowna

Anyone who wants to can call Rebecca Fanning - The Research Advisor to Swan at the Treasurer’s office Tel: (02) 6277 7340

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Guest

Just received email from employer saying it will be going

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Just spoken with Rebecca and she confirmed what everyone has been posting. I can't see my partner's employers compensating us for this. So, the way life stands for us at the moment is that we return to the UK asap - will have to put all relocation costs on the credit card (unless we can claim flights from the employers). We will have no jobs to go to and with little chance of getting any in the industries we left for this 'wonderful opportunity'. If we get no work we'll have our house repossessed. Cheers Australia, what a fantastic opportunity you have given us SOOOO very glad we made the move, especially with two young children who will most likely be living in a hostel 6 months from now. I will certainly be recommending Australia to anyone thinking of moving, it's certainly been a great experience for us!

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Just spoken with Rebecca and she confirmed what everyone has been posting. I can't see my partner's employers compensating us for this. So, the way life stands for us at the moment is that we return to the UK asap - will have to put all relocation costs on the credit card (unless we can claim flights from the employers). We will have no jobs to go to and with little chance of getting any in the industries we left for this 'wonderful opportunity'. If we get no work we'll have our house repossessed. Cheers Australia, what a fantastic opportunity you have given us SOOOO very glad we made the move, especially with two young children who will most likely be living in a hostel 6 months from now. I will certainly be recommending Australia to anyone thinking of moving, it's certainly been a great experience for us!

 

I dont mean to sound heartless,but you surely cant make that much on LAFHA that it is going to affect you to this extent. You gave up jobs here to go to Australia on a TEMPORARY visa, knowing the conditions.Yes you got LAFHA but did you base your decision on getting this? Your partner could have lost that job at anytime on a 457 and have had to find another one within 28 days or you would have had to leave. How long have you been there, can you not try for PR? When you add up relocation back to UK costs, flights etc, it is a lot of money, I know, have done it. Instead of spending all this and coming back to nothing, could you not just tighten your belt a bit until you can get PR or your partner can find a higher paying job that will sponsor him.

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I dont mean to sound heartless,but you surely cant make that much on LAFHA that it is going to affect you to this extent. You gave up jobs here to go to Australia on a TEMPORARY visa, knowing the conditions.Yes you got LAFHA but did you base your decision on getting this? Your partner could have lost that job at anytime on a 457 and have had to find another one within 28 days or you would have had to leave. How long have you been there, can you not try for PR? When you add up relocation back to UK costs, flights etc, it is a lot of money, I know, have done it. Instead of spending all this and coming back to nothing, could you not just tighten your belt a bit until you can get PR or your partner can find a higher paying job that will sponsor him.

 

Yes, it will affect us this much unfortunately. I understand that we could have had to return to the UK had my partner lost his job, but given that the firm headhunted him and is very short of skills in his area of work, given these facts we felt fairly secure, at least for a few years. As for your other point, yes this will mean we cannot meet essential living costs. I already work from home as many hours as I can. If I was to look for work outside of home our child care costs would not be covered so we would be worse off ($100 per day per child). If we were childless or had older children then I'd just get a full time job, I've always worked full time in the UK but we had a lot of family support. Obviously this has been our own stupid fault for not realising the extortionate cost of living and also failing to have a chrystal ball when we decided to come over. I don't want to hijack this post, many other people are affected, but I have in no way overstated our situation. This, as ginger has also stated, has turned out to be the worse decision we have ever made. I understand what you're saying though and will consider our options, it just makes me feel less inclined to stay now as I feel we came here for a better life for our children, an experience for them for a few years, and we'll be worse off on every front now.

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My situation is defintely the same as above but I will speak to my employer to see what options I have. Asking for a 14k payrise seems alot to me but I'm gonna try.......I also need to see if PR is an option even though I've only done 9 months on my 457 visa. I came here to escape living life bobbing just above the water and here now I will sink. I also didn't forsee the cost of living being quite so high. A big mistake I will never forget. I just pray that even Rebecca Fanning has handed out duff information (could well be true with this et of idiots in charge). My wife would work if Australia made it possible...I have messed up big time in coming here and should have just stayed at home.

It feels like every road I take there is a dead end......we are losing lafha, tax is incraesing, we get no benfits from UK or Oz, childcare is way too high to contemplate and I have rent to pay to this hole!!

 

Once again I hope the above is mis information as surely when the budget quote states 'everyone' who entered into etc... didn't just mean 'Australians'

 

ginger

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My situation is defintely the same as above but I will speak to my employer to see what options I have. Asking for a 14k payrise seems alot to me but I'm gonna try.......I also need to see if PR is an option even though I've only done 9 months on my 457 visa. I came here to escape living life bobbing just above the water and here now I will sink. I also didn't forsee the cost of living being quite so high. A big mistake I will never forget. I just pray that even Rebecca Fanning has handed out duff information (could well be true with this et of idiots in charge). My wife would work if Australia made it possible...I have messed up big time in coming here and should have just stayed at home.

It feels like every road I take there is a dead end......we are losing lafha, tax is incraesing, we get no benfits from UK or Oz, childcare is way too high to contemplate and I have rent to pay to this hole!!

 

Once again I hope the above is mis information as surely when the budget quote states 'everyone' who entered into etc... didn't just mean 'Australians'

 

ginger

 

That's what I was thinking Ginger. Maybe I'm a little slow on the uptake, but to me 'everyone' means just that. Where did it say in any of the literature that it only applied to Australians? Also, there've been reports in the press about it (Ireland, for one), on various LAFHA websites and by accountants who all interpreted it as we did. Surely all these, presumably educated people can't all have misread the release? :err:

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Yeah I have emailed oncore 'again' as I need some answers, I have also emailed the treasury. I know they claim to have made it clear in November but that's about the time I applied for it and was told nothing about future changes. Hopefully someone will be able to give us 100% confirmation tomorrow so that we can at least take th necessary steps to try and at least counter act the damage thsi will cause alot of us.

 

Ginger

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My situation is defintely the same as above but I will speak to my employer to see what options I have. Asking for a 14k payrise seems alot to me but I'm gonna try.......I also need to see if PR is an option even though I've only done 9 months on my 457 visa. I came here to escape living life bobbing just above the water and here now I will sink. I also didn't forsee the cost of living being quite so high. A big mistake I will never forget. I just pray that even Rebecca Fanning has handed out duff information (could well be true with this et of idiots in charge). My wife would work if Australia made it possible...I have messed up big time in coming here and should have just stayed at home.

It feels like every road I take there is a dead end......we are losing lafha, tax is incraesing, we get no benfits from UK or Oz, childcare is way too high to contemplate and I have rent to pay to this hole!!

 

Once again I hope the above is mis information as surely when the budget quote states 'everyone' who entered into etc... didn't just mean 'Australians'

 

ginger

 

I am amazed that people were effectively getting $14k or cash in their pocket through LAFHA! It couldn't have been right, it was surely up to you to make sure you got a salary commensurate with your skills and experience and not depend upon tax breaks.

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Do let us know how you get on. My partner's firm has been saying they're looking into it but they've given us no information at all and haven't even bothered returning my call today, which has irked me somewhat! I really hope we can all sort something out. I can't see how they can legally do this, though they obviously can or wouldn't have! Anyway, good luck with it. By the way, where in Oz are you?

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I can't see how they can legally do this, though they obviously can or wouldn't have!

 

LAFHA is a governement defined tax break not part of employment contract. As such those ********** can change it as and when they like. So basically there's an election soon, if you're an Aussie (...and therefore voting) you get 2 more years of LAFHA. If you're overseas and don't vote it's gone in 6 weeks.


22/02/11 First employer interview - 06/04/11 Second employer Interview - 13/05/11 Offer of employment - 05/06/11 Documentation submitted - 08/06/11 457 Visa application lodged. 28/06/11 - Applicant Approved 27/08/11 - Arrived Sydney, NSW.

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I am amazed that people were effectively getting $14k or cash in their pocket through LAFHA! It couldn't have been right, it was surely up to you to make sure you got a salary commensurate with your skills and experience and not depend upon tax breaks.

 

I would need 14k wages to replace the 10k less tax I paid. I still paid tax just a little less. You may think it's unfair but it was there for people coming over who maintained a home elsewhere and intended to go back...that was me! I did quite a bit of research but didn't fully forsee the cost of living and also didn't realise the limitations a 457 visa would give me. Someone on my salary would get part A benefits, be able to claim back for childcare etc... and there fore live a much more comfortable life than me. Say what you want but all the staff in my office earn around 80k a year and get all the benefits....would they be happy if I earnt 100k just so it was a level playing field I think not.

 

I would suggest that when people are facing a hard time like we are you keep your opinions to yourself when they don't directly affect you. You can say that you pay more tax etc... but you probably get help elsewhere too.

 

I did honestly think my salary would be enough but realistically to return home we need to save and my wage doesn't allow that.

 

ginger

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The child care is the killer for us. I have no problem at all working, I have done full time all my life, I would happily go back to 40 hours, pay my bit etc but I am unable to because we don't qualify for the subsidy. I am a social worker and we have calculated that my take home pay would be pretty much equal to paying 2x child care for five days per week.

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Putting aside all other issues regarding the fairness or not of LAFHA, is anyone else just gobsmacked at how incompetent the government has been in all this? Reading all the budget interpetations by many experts on LAFHA, everyone read the report to say that existing LAFHA agreements would be allowed to continue until 2014, and indeed the figures would seem to back up that interpretation- a saving of $50m as opposed to a much bigger projected saving from the November statement which said that all LAFHA was to go this June.

How can the government now be appearing to backtrack on what was such a clear statement?

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Guest RaoulDuke66

All, I’m posting this message on a number of forums as it will provide 100% clarity on what is happening with regard to LAFHA for overseas workers.

I spoke with Rebecca Fanning, Wayne Swann’s research advisor on the LAFHA reforms. I can only recount the conversation I had with her. You may want to do your own due diligence on the matter. And, up front, I want to praise her for her honesty and taking the time to come back to me after office hours, regardless of the dirty work she’s being made to do.

Anyway, she conceded that Budget paper 2 does in fact say that all LAFHA reforms will be subject to a transitional period. However, she apologised for that, and said that it meant to say that only Australians will be allowed 2 years to re-arrange their financial affairs to an affordable position. Foreigners are left up a creek from 1 July 2012.

However, the reason there has been confusion on this is because Wayne Swann and his Treasury haven’t been 100% honest about the nature of the reforms in respect of overseas workers. What we’ve all missed (i.e. what they’ve tried to hide) is that they basically view the overseas worker LAFHA budgetary savings as a direct pass-through cost to business. Of course, I can understand why Swann wouldn’t say that, given how much he pretended to be helping Australian business in the budget. He’ll no doubt view it as a tax on nasty foreign companies - but I, like thousands of others who now can’t afford to live here/leave, work for an Australian company.

The reason I say this regarding the nature of the reforms is because the Treasury told me that they expected all employees’ losses to be met by employers through renegotiated employment contracts. I asked what happens if the employer refuses to renegotiate to a liveable wage for that individual/family, leaving the employee unable to afford to stay in Australia but unable to afford to go. She said that shouldn’t happen – it is up to the employer to meet all losses incurred due to the reforms.

I also pointed out that whilst the changes were intended to level the playing field between Australian employees and overseas employees, it costs an overseas employee thousands more per year to live and work here (health care, schooling etc), and therefore overseas workers (especially families) will be significantly worse off than Australians in the same job with the same company. She said that the Treasury expected companies to pay additional amounts to overseas workers to meet those additional costs.

Further, I asked when had notice been given that the proposed changes outlined in November were confirmed. She said that items set out in the mid-year outlook and consultation paper in November had the same effect as if set out in the budget. In other words, employers should have known exactly what was happening back in November, and should have been renegotiating overseas employees’ contracts back then to ensure that they didn’t lose anything. I took from her the Treasury view that, if an employer hasn’t renegotiated their contracts for overseas workers, they’ve been deliberately pulling the wool over the eyes of those employees, and they need to re-package salaries now.

All of this will be confirmed when the draft legislation and a press release is issued on Monday, although of course they’ll omit the bit about this being intended as a pass-through cost to nasty horrible foreign companies (although I understand that HM’s foreign office sees it as exactly that).

In summary, the Treasury view:

- a 2 year transitional period for Australian workers;

- nothing for overseas workers;

- businesses to provide repackaged contracts to all affected overseas workers to meet all additional costs.

My view would be that everyone affected should, as a first step, gather all information available to them before deciding how to proceed in their own particular circumstances:

- approach their employer and at least give them the benefit of this information, that the Treasury intends the company to pick up the employee’s losses;

- confirm the position regarding flights home (which the employer is supposed to pay for), so that the position on that is clear with them;

- confirm the position regarding employment contract termination costs (you may have to pay penalties within a certain period of having entered into the contract); and

- find out whether your employer has transfer opportunities to countries looking to have skilled/professional overseas labour (of course, you’ll want to stay clear of countries which have a history of these types of tax grabs from foreigners).

On a positive note, this is a great opportunity for businesses outside of Australia to recruit skilled and professional employees, and I have no doubt that anyone on a 457 will walk into a job abroad on a liveable wage for them and their family.

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Thank you for taking the time to post that. I spoke with Rebecca earlier and also felt rather sorry that she had been landed with such a hideous job! Good luck to everyone who'll be having conversations with their employers tomorrow.:rolleyes:

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Guest RaoulDuke66

Update: giving the transitional period to Australians but not to British workers contravenes Article 25 of the UK/Australia Double Taxation Convention 2003 -

 

Nationals of a Contracting State shall not be subjected in the other ContractingState to any taxation or any requirement connected therewith, which is other or moreburdensome than the taxation and connected requirements to which nationals of thatother State in the same circumstances, in particular with respect to residence, are or

 

may be subjected.

UK nationals need to contact the foreign office asap http://ukinaustralia.fco.gov.uk/en/help-for-british-nationals

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I for one am amazed at how disjointed the information has been. There have been several interpretations but all have come to a same conclusion. I too have spoken with Oncore who have been admant that nothing will change for two years, but then reading the LAFHA official site there have been significant changes.

 

I am going to ignore all hear say and just prey my paycheck on July 25th reflects that of June 25th. IF it doesnt, then it will hit me very hard, if it does, HUGE relief.

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