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Guest osbornicus

457, LAFHA: Issues re qualification for LAFHA

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Guest osbornicus

Hi,

 

I am completing an internal transfer (London to Sydney) with my company - although to a new role and different subsidiary.

 

I would be moving over on a business sponsored long stay visa.

 

When I asked about LAFHA (as no mention was made in my offer letter) I was told:

 

'LAFHA is only available to those employees who have a contract for a defined period of time and have the intention to return home at the end of their assignment. You have been made a permanent offer of employment and the LAFHA does not apply in your circumstances.

 

Does this make sense?

 

I have no idea if I will return to the UK following my period of working in Australia. I believe that LAFHA offers me significant incentives re food and rent rebates which I should try and get included in my contract but can anyone recommend a course of action?

 

If I inform my company that although my intentions are long term I dont want to rule out a return to London and therefore request that LAFHA be considered in my offer letter?

 

Thanks in advance for your advice.

 

Tim

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Guest WARDStoOZ

Hi Tim and welcome to PomsinOz! It's a tricky one, maybe you could suggest that you plan to return to the U.K. after a couple of years and then you can go ahead with applying for permanent residency if you wish and the LAFHA payments would surely just stop from that point on...

 

Dan :-)

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My OH is going on a 457 he has been doing a lot of digging on this subject his findings are

 

If an internal transfer I would have thought they would have sponsored a permanent res as they are implying that because it is a permanent role you will be staying there, however seeing they have done a 457 instead the ATO STATES that you are technically living away from home if you still have a UK residency and you can claim LAFHA for a max of 4 years according to them so therefore go on to ATO website and type in LAHFA and show these to your employer

ps You must negotiate to take LAHFA into consideration in your salary before you start physically working in Australia as they do not allow retrospective claims


Lyn (50) Barry (39) Ross (9) IT WAG !!!

OFFERED 457 ON 18/02/2010 started 457 1/3/2010, CO ON 04/03/10, 457 awarded 16/3/10,arrived 23/4/10

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Guest davegoldy

Hi Tim,

Most people on a 457 declare that they intend to return to the UK at the end of this visa- and so they would be eligable to recieve LAFHA for upto 4 years. As you don't know if you will be returning I would suggest you are eligable using this method, until PR is applied for.

At the end of the day its upto your employer to administer this allowance and if you can't convince them your eligable then you'll get no where!

Yes LAFHA gives a tax free amount to compensaite for additional costs involved with living away from home to work. If calulaited correctly the employer stands to save on their taxes too and will not be FBT liable.

If its any use we run a service calculaiting and certifying people are eligable to recive LAFHA, check Super Return - Aussie Tax Refunds! Who are we? for more info.

Good luck,

David

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Guest DSL
Hi,

 

I am completing an internal transfer (London to Sydney) with my company - although to a new role and different subsidiary.

 

I would be moving over on a business sponsored long stay visa.

 

When I asked about LAFHA (as no mention was made in my offer letter) I was told:

 

'LAFHA is only available to those employees who have a contract for a defined period of time and have the intention to return home at the end of their assignment. You have been made a permanent offer of employment and the LAFHA does not apply in your circumstances.

 

Does this make sense?

 

I have no idea if I will return to the UK following my period of working in Australia. I believe that LAFHA offers me significant incentives re food and rent rebates which I should try and get included in my contract but can anyone recommend a course of action?

 

If I inform my company that although my intentions are long term I dont want to rule out a return to London and therefore request that LAFHA be considered in my offer letter?

 

Thanks in advance for your advice.

 

Tim

 

 

Hi Tim,

 

You received quite a bit of good information above. As someone who is currently here in Oz and receiving LAFHA I will try and tell you what I know about it, although I stress I am no expert.

 

Firstly, I have found that there are a great number of employers who do not understand the application of LAFHA and as a result a lot of people are not getting what they could and many have their allowance mis-calculated.

 

As someone who is going to be on a temporary visa in Australia then there is always going to be a date at which you must leave the country -unless you gain PR, which there is no guarantee of. As I understand it, you lose the benefit once you submit an application for PR. Also if you buy a house you obviously lose the rent portion of the allowance.

Because your employer has brought you to Oz on a temp Visa then technically you cannot have a permanent contract, at this moment in time you are only guaranteed work for the length of your visa regardless of the length of any contract. I would not mention that you may return to London as it is completely irrelivant

 

Because of this you are a candidate for LAFHA. The problem here is that the statement made by your employer may be their own policy. It is not compulsary for them to provide it to you, which is unfortunate because I understand it doesn't cost them anything to allow you this benefit.

 

Lyn also made a point about your employer bringing you over on a PR visa, the reason this isn't normally done is that it takes about 1 year to process and there is no way of fast tracking. I asked about this when I was made an offer and I was told my 457 would only take 4 weeks (which it did) and that I could apply for PR whenever I wanted. Also Lyn mentions that it must be negotiated before you start working in Oz, I didn't even know about LAFHA when I came here and the Paperwork was given to me on my first day, as I wasn't paying rent for my first 2 months I didn't give it back until 8 weeks in as you have to provide a copy of your rental agreement so that it can be applied properly. If you are calculating LAFHA prior to having a rental then there may be something wrong.

 

Hope this makes some sort of sense.

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Guest osbornicus

I very much appreciate all the advice.

 

I managed to get on LAFHA and converted to a 4 year contract. As I understand it, it is all about 'intent' to return to the UK. Ultimately who knows what will happen so unless you are 100% set on emigrating for good then this seems like a no brainer to me, especially as the employer incurs no extra cost. Cushions the blow of relocating as well.

 

Next issues:

 

- Exactly how hard is it to find a place to rent in Sydney? Is it cutthroat?

- Finding kindies for my kids

- Getting packed up and heading out!!

 

All the best,

 

Tim

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My OH is going on a 457 he has been doing a lot of digging on this subject his findings are

 

If an internal transfer I would have thought they would have sponsored a permanent res as they are implying that because it is a permanent role you will be staying there, however seeing they have done a 457 instead the ATO STATES that you are technically living away from home if you still have a UK residency and you can claim LAFHA for a max of 4 years according to them so therefore go on to ATO website and type in LAHFA and show these to your employer

ps You must negotiate to take LAHFA into consideration in your salary before you start physically working in Australia as they do not allow retrospective claims

 

You cant claim laughra (proper spelin ) its up to the employer as it puts extra implications on them . With the economic climate they aint going to shell out any more than they can get away with


Here at last:jiggy:

SUFC life not a pastime

I limit myself to 2 drinks a day, I`m now 10 years in front make that 15

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Guest davegoldy
You cant claim laughra (proper spelin ) its up to the employer as it puts extra implications on them . With the economic climate they aint going to shell out any more than they can get away with

 

 

yes the employer has to change a few things in their payroll system (takes about 10 minutes) but they will not have to pay a range of taxes on the LAFHA amount- so they actually stand to save money when giving the allowance (if its calculated correctly - i.e. no FBT liabilty).

Cheers,

David

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yes the employer has to change a few things in their payroll system (takes about 10 minutes) but they will not have to pay a range of taxes on the LAFHA amount- so they actually stand to save money when giving the allowance (if its calculated correctly - i.e. no FBT liabilty).

Cheers,

David

 

Does the beneficiary lose out on tax , it was calculated on a thread here at one time and the tax breaks outweighed the benefits of the lafha

 

Mally


Here at last:jiggy:

SUFC life not a pastime

I limit myself to 2 drinks a day, I`m now 10 years in front make that 15

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Guest davegoldy

Don't understand what you mean tax breaks outweigh benefits...LAFHA is a tax free allowance given to individuals, the effective saving to an individual is the rate of tax they would pay on the LAFHA amount.

LAFHA gives workers greater net and saves employers tax too...win win when calculaited correctly.

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Similar to salary packaging , a mate was offered lafha , but this was in with his contract 55k ,contract with lafha 50k + lafha in effect same money but with tax incentives

 

Mally


Here at last:jiggy:

SUFC life not a pastime

I limit myself to 2 drinks a day, I`m now 10 years in front make that 15

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Guest nicko2020

Hi guys

 

Whats a resonable amount of LAFHA to claim considering my current package is worth around $140,000 as im going to try and negotiate before i leave for perth. I dont have huge amounts of knowledge on rental prices as af yet.

 

Any help with me great

 

Nick

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Guest DSL

Hi nick

 

It really depends on the company you will be working for as they are not required to provide LAFHA to 457 holders.

 

I have worked for 2 companies over here. The first one paid lafha on the full amount of my rent and food component, which was over 4k per month. All I had to do was sign a declaration and provided a copy of my rental agreement. The company I work with now have a cap of $500/week on lafha. If they had no cap I would be claiming a similar amount to before of 1000/week. I am on similar package to you and the 500/week results in about 600/month extra in my pocket.

 

If I were you and the company were willing to negotiate on lafha I would be looking at $500/week if you intend to live in the suburbs or $1000/week if you want to live in or around the city.

 

Hope this helps.

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