Sal1705

Hi everyone,

We have been here since July last year and have been receiving LAFHA. We are on a 457 visa.

We are currently renting but want to invest in the Aus property market as we will be here for 4 years according to our visa.

Is it right that as soon as we buy a house we are no longer entitled to receive LAFHA? Wanted to try and contact the ATO but closed over Public holidays and their website very vague!

If we do go ahead and buy here we would sell our house in the UK however, we would still have financial ties to the UK (we are continuing to pay into endowment policies and pensions).

I understand that they may consider us to have "permanent intentions" if we do buy but seems a bit wrong that ATO would consider us "permanent" but we would still be considered "temporary" as far as school fees ($4500 pa) and medicare is concerned???

We do not know whether this is a permanent move yet but appreciate if we do apply for PR then LAFHA would stop.

Any help???

Thanks everyone!

haggis supper

We were in a similar situation - had been on a 457 visa for 2 years last August when we decided to but rather than rent. To buy we had to apply to the FIRB, but this was a formality. I also advised my employers. Strictly speaking they could have cancelled my LAFHA as soon as I indicated a desire to remain permanently in Australia - buying a house is regarded as an intention to stay by the ATO and as such means you do not qualify for LAFHA.

My employers decided to keep paying me until we actually moved house but there was zero possibility of extending it beyond then. The rules are not exactly set in stone but as employers take on the liability they are unwilling to push things too far and run the risk of attracting attention from the ATO - it's hard to prove that you are temporary if you buy here. Believe me I tried, especially as I was still on a 457 and still had a 4 year contract.

Therefore if you buy you will almost certainly lose LAFHA.

Good luck. The good news is owning your own house is much better than renting.

Haggis.

Sal1705

Hi Haggis,

Thanks for your reply. You have confirmed what we thought was the case but hoped was not!!

Just seems unfair that we are considered permanent enough not to be entitled to LAFHA but we still have to pay public school fees and medicare top up as we are considered temporary.

Thanks anyway.

Sally

Little miss reub

Whats does LAFHA stand for?

Dorothy

If you buy a home how could you be living away from home? Other temp residents are not entitled to LAFHA, so I think it's a gift if you can get it.

Pollyana

Living Away From Home Allowance - payable in some cases to temporary visa holders.

Must admit I'm inclined to agree with Dorothy. It's intended for when you are living away from your permanent home, so if you have bought a house here I think there would be an issue with claiming you weren't permanently living here.

Vanessa

A friend of mine still gets it even though they have bought a house here. They have been here for 5 years. However, they do still have a house in the UK. For them they do not intend to stay here permanently. Buying a home does not mean that you intention is stay, just that you don't want to waste money on rent!

Sal1705

I agree Vanessa.

We have not yet decided whether this would be a permanent move (we have only been here 7 months).

Just don't want to be paying somebody elses mortgage!

jayr

To be clear, once the ATO finds out your friend will be required ot pay the LAFHA tax break they have been receiving.

As far as the ATO is concerned, the purchase of a home is considered an intention to stay which means the taxpayer is no longer "living away from home".

I wouldn;t like to be on the sticky end of a tax bill from the ATO for five years's worth of incorrectly claimed LAFHA - that could amount easily to $50k plus

Sal1705

Ok everyone - have now spoken to the ATO.

Buying a house DOES NOT necessarily mean LAFHA will stop however, they will stop the accommodation/rental aspect of the benefit.

Each case is considered on its own merit but if you can prove your intention is to RETURN (keeping a house in the UK or legitimate financial commitments etc.) then you can still claim the food allowance aspect.

Regardless of the above, I suggest anyone who is thinking of buying and claiming LAFHA needs to speak to the ATO who I found to be very helpful.

Sally

upandrunning

In NZ lots of people buy their houses and put them into company name and then rent them back "from the company for the market rate" as any loss on the property ie mortgage-less rent can be deucted against your taxable income. If you bought the house in a company name and rented it surely you could still claim LAFHA?
Just a thought....
All the ozzies seem to have negatively gearred investment propertie nowadays so it might work the same as in NZ...although apparently the iRD is trying to clamp down on it.

jayr

Interesting, though the food component is probably only about 20% of the total LAFHA benefit.

haggis supper

Sally,

It's also worth noting that the decision to pay LAFHA or not depends on your employer. My employer considers the LAFHA/ATO rulings to be suitably vague (and that and there are numerous considerations that must be taken into account when determining whether or not to pay LAFHA. I argued that although I bought a house I was still on a 4 year visa and still intended to return home. They felt that as the guidelines were unclear they were unwilling to take the chance.

Good luck - it would be great if you're able to keep getting it !
Col