LAFHA under threat
#136
Lost in BE Cyberspace
Joined: Dec 2010
Posts: 14,040
Re: LAFHA under threat
Perhaps this may help address the issue of employers bringing 457ers over on lower salaries than their Australian counterparts due to being compensated by LAHFA? (yeah, I know it's supposed not to happen but it does)
The 457 is a brutal visa - I came in on it because I had no other choice, but got PR sponsorship as soon as I could. I know of only a very few (and very confident) people who stay on 457 to keep LAHFA benefits - most would rather have the security and benefits of permanent residency
The 457 is a brutal visa - I came in on it because I had no other choice, but got PR sponsorship as soon as I could. I know of only a very few (and very confident) people who stay on 457 to keep LAHFA benefits - most would rather have the security and benefits of permanent residency
#137
Just Joined
Joined: Nov 2011
Posts: 3
Re: LAFHA under threat
From my limited reading of what the proposals are for changing the rules on the LAFHA it seems for the majority it will stay as an allowance but be taxed as income.
I guess that as an allowance it will not be included in the calculation for super contributions from the employer.
Has anyone come to a different conclusion?
I guess that as an allowance it will not be included in the calculation for super contributions from the employer.
Has anyone come to a different conclusion?
#138
Forum Regular
Joined: Dec 2011
Posts: 131
LAFHA - New Offer and July impacts?
Hello everyone. I am new to this forum which has been a very useful resource. I am a 35 year old American with a job offer to move to Melbourne - 170K with an Aus bank and I am being offered a Lafha review with a Big 4 accounting firm, and an additional 20K as a one off to help with the move over. (I won't be shipping things over, just buying once I am there) I am hoping I can get by on this salary but can see from this forum it is not exactly good money to say the least given the cost of everything.
My understanding from this thread is that Lafha will go away in July. My new employer however has mentioned 'strong lobbying' is underway and that things may change - such as an exception for current Lafha holders for an extra year for example. Has anyone heard anything about this?
I am single and currently rent a basic one bedroom apartment on 1000 USD a month (I live in a Denver Colorado suburb in a low cost of living area - cost of living here appears about 40% of Melbourne and bananas in particular appear cheaper here )
My questions:
If you are coming from a low cost of living area will my Lafha allowance (until July when it drops off) be based on my low rent here or a 'reasonable' one bedroom cost in Melbourne? When I lived in London in 2010 for example a similar apartment cost me 3000 USD a month. Im looking at stuff around 2500 a month in the CBD for small one bedrooms as I want to be close to work and not deal with commuting. This frankly looks like the low end on DBC costs and I wondered if this will be considered 'reasonable'.
Is the food allowance 'standard' based on a single person? (I cant seem to find a reference for that)
Are there any other 'LAFHA' perks I should push for before July? I see flights home can be covered for example - is it possible to buy a couple flights before July to get them covered (such as a Christmas 2012 flight for example), and can these flights be to different countries (I have friends in the UK for example having lived in London for 8 years, and also Argentina, or only the country of your passport?)
I was also told by someone else it might be possible to front load rent payments before July - this sounds dodgy to me (i.e. pay the landlord say 6 months in advance due to 'new to Australia and no credit' reasons)
I have tried to learn what I can before posting this on the forum, so I apologize in advance if this is answered elsewhere.
Cheers
My understanding from this thread is that Lafha will go away in July. My new employer however has mentioned 'strong lobbying' is underway and that things may change - such as an exception for current Lafha holders for an extra year for example. Has anyone heard anything about this?
I am single and currently rent a basic one bedroom apartment on 1000 USD a month (I live in a Denver Colorado suburb in a low cost of living area - cost of living here appears about 40% of Melbourne and bananas in particular appear cheaper here )
My questions:
If you are coming from a low cost of living area will my Lafha allowance (until July when it drops off) be based on my low rent here or a 'reasonable' one bedroom cost in Melbourne? When I lived in London in 2010 for example a similar apartment cost me 3000 USD a month. Im looking at stuff around 2500 a month in the CBD for small one bedrooms as I want to be close to work and not deal with commuting. This frankly looks like the low end on DBC costs and I wondered if this will be considered 'reasonable'.
Is the food allowance 'standard' based on a single person? (I cant seem to find a reference for that)
Are there any other 'LAFHA' perks I should push for before July? I see flights home can be covered for example - is it possible to buy a couple flights before July to get them covered (such as a Christmas 2012 flight for example), and can these flights be to different countries (I have friends in the UK for example having lived in London for 8 years, and also Argentina, or only the country of your passport?)
I was also told by someone else it might be possible to front load rent payments before July - this sounds dodgy to me (i.e. pay the landlord say 6 months in advance due to 'new to Australia and no credit' reasons)
I have tried to learn what I can before posting this on the forum, so I apologize in advance if this is answered elsewhere.
Cheers
#140
Re: LAFHA - New Offer and July impacts?
Work on the basis there is no Lafha as it will most likely disappear in July. It's plenty of money but if you want to live in central Melbourne expect to pay closer to $1000 a week not a month.
#141
Re: LAFHA - New Offer and July impacts?
I would not bother with LAFHA in your calculations, you are (through no fault of your own) the perfect example of why it is being abolished. i.e. taxpayers subsidising the income of well paid overses workers instead of their employers paying at the appropriate level.
Anyone coming over now should negotiate the salary that they feel is appropriate and that they need without LAFHA, because once that is abolished you might find your employer does not top it up and you are living on less than you thought. It is very likely that it will go.
I have never heard of anyone mention flights home being covered by LAFHA even so.
On $170k, you would take home just under $10k a month, which seems comfortable for most single people?
We earn comparable money as to when we were in the UK, however spend more on housing here so we have less disposable income after rent, it doesn't mean that it is not worth our being here. We have plenty of money to live on and accept that housing costs a bit more in Sydney than SE England.
Anyone coming over now should negotiate the salary that they feel is appropriate and that they need without LAFHA, because once that is abolished you might find your employer does not top it up and you are living on less than you thought. It is very likely that it will go.
I have never heard of anyone mention flights home being covered by LAFHA even so.
On $170k, you would take home just under $10k a month, which seems comfortable for most single people?
We earn comparable money as to when we were in the UK, however spend more on housing here so we have less disposable income after rent, it doesn't mean that it is not worth our being here. We have plenty of money to live on and accept that housing costs a bit more in Sydney than SE England.
#142
Forum Regular
Joined: Dec 2011
Posts: 131
Re: LAFHA - New Offer and July impacts?
Many thanks, I am not really debating as to why it is being abolished I can see the reasoning behind it certainly.
I do wonder if the lobbying aspect is true - is it 100% going away in July or is there still room for it to be modified based on the efforts of the banks and others re this policy? My other interest was simply if there are things one can buy now under LAFHA until July - paying rent in advance, food that will last, that kind of thing. Tax policy is tax policy and while a perk exists people should try to leverage it, especially with firms still pulling people in to Aus with it even at this late stage.
The main impact this may have is on international skilled employees on the edge with the offer (as I was) - many firms get people out on essentially lateral moves or even paying slightly less in real spending power terms for the 'lifestyle' and asia region experience - removing this will essentially be a 10% pay cut in real terms (or more) for some people. I was on about 100K GBP in London prior to moving to the USA and given this board talks about a 2.2 ratio re salaries that are a wash I'd say 170K is already a pay cut, with the LAFHA cut adding to it. I know of others that make the more for a cut as well for the lifestyle options and/or the asia region experience (the reason a lot of us in finance do it to be honest), but at some point firms will probably have to pay more since they won't be able to use LAFHA as a selling point anymore.
One final comment - for everyone on 'high' salaries using LAFHA what was once affordable rent will not be anymore. This may have a nice side effect on rent prices when a large number of expats in major cities no longer full as comfortable about paying 5K a month on post-tax earnings for rent!
I do wonder if the lobbying aspect is true - is it 100% going away in July or is there still room for it to be modified based on the efforts of the banks and others re this policy? My other interest was simply if there are things one can buy now under LAFHA until July - paying rent in advance, food that will last, that kind of thing. Tax policy is tax policy and while a perk exists people should try to leverage it, especially with firms still pulling people in to Aus with it even at this late stage.
The main impact this may have is on international skilled employees on the edge with the offer (as I was) - many firms get people out on essentially lateral moves or even paying slightly less in real spending power terms for the 'lifestyle' and asia region experience - removing this will essentially be a 10% pay cut in real terms (or more) for some people. I was on about 100K GBP in London prior to moving to the USA and given this board talks about a 2.2 ratio re salaries that are a wash I'd say 170K is already a pay cut, with the LAFHA cut adding to it. I know of others that make the more for a cut as well for the lifestyle options and/or the asia region experience (the reason a lot of us in finance do it to be honest), but at some point firms will probably have to pay more since they won't be able to use LAFHA as a selling point anymore.
One final comment - for everyone on 'high' salaries using LAFHA what was once affordable rent will not be anymore. This may have a nice side effect on rent prices when a large number of expats in major cities no longer full as comfortable about paying 5K a month on post-tax earnings for rent!
#143
Re: LAFHA - New Offer and July impacts?
My exposure to LAFHA is limited, so I may be somewhat off here. I have had one offer that included LAFHA some years ago, and it was a fairly straight forward formula, based on weekly estimates, broken out into categories like food and accommodation and a few others (cant be arsed to look for the file, sorry). It definitely did not account for the actuals, I recall the comment on my what-if scenario, as if I were to find a better place than that I am being compensated for, and the answer was something along the lines of tough sh!t, not part of the allowance. That kind of answers the stockpiling question, I'd guess. Perhaps it would be more productive negotiating other perks, such as flights home, company car, memberships (if you are into this kind of thing), performance based multipliers, or if nothing else, just blatantly make it about take-home pay, LAFHA or no LAFHA, this is what I want to have in my pocket after it is all up and done kind of thing.
#144
Re: LAFHA - New Offer and July impacts?
I think employers are being a bit sneaky if they are waving LAFHA benefits around as an enticement at this time, I don't think it is a certainty that it will be abolished, but I believe it is very likely. I can't see lobbying making much of a difference, especially when done by the so called corporate fat cats. The politics won't make sense.
I don't think you can "pre buy" anything with LAFHA, it is an allowance paid with salary and evenly divided over the year like salary AFAIK. I still don't think you can get a LAFHA allowance for flights home. If you want flights home, negotiate them as part of your package.
What occupation are you in? I agree that £100k to $170k is a drop in earning power and moving for financial reasons doesn't add up. However it is still a very liveable salary for a single person and if there are other reasons to move, then it might add up over all.
I don't think you can "pre buy" anything with LAFHA, it is an allowance paid with salary and evenly divided over the year like salary AFAIK. I still don't think you can get a LAFHA allowance for flights home. If you want flights home, negotiate them as part of your package.
What occupation are you in? I agree that £100k to $170k is a drop in earning power and moving for financial reasons doesn't add up. However it is still a very liveable salary for a single person and if there are other reasons to move, then it might add up over all.
#145
Forum Regular
Joined: Dec 2011
Posts: 131
Re: LAFHA - New Offer and July impacts?
I am in the financial industry. To be fair the 170K also has a bonus element on top that I think would take it over 200K even in down years, but it is still not exactly an increase in earnings power. Ive also been overed 15K to help with the move but after taxes that will go fast. (That was offered instead of moving my house contents to Australia as frankly while it would have been 100% covered I am not going to move furniture etc over on a temp visa when worst case I have to exit the country in 28 days) Ive struggled finding out salary surveys for others in the industry outside of sites like glassdoor which seem to indicate the pay is fair.
It comes down to the Asia region and Australia as a growth area vs the UK over the next 5 years. It may well be that Europe will sort itself out and Australia is mainly a commodity boom and bust country sitting on a housing powder keg so I am moving with crossed fingers!
I do struggle with the cost of living and imagining it - sounds quite horrid reading these boards. I thought London was an insane cost of living on 100K gbp (I live better in Denver on 100K USD!) and 200K+ with bonus feels like good money to me - I guess a lot of it will be learning where to shop and finding the right places for happy hour.
It comes down to the Asia region and Australia as a growth area vs the UK over the next 5 years. It may well be that Europe will sort itself out and Australia is mainly a commodity boom and bust country sitting on a housing powder keg so I am moving with crossed fingers!
I do struggle with the cost of living and imagining it - sounds quite horrid reading these boards. I thought London was an insane cost of living on 100K gbp (I live better in Denver on 100K USD!) and 200K+ with bonus feels like good money to me - I guess a lot of it will be learning where to shop and finding the right places for happy hour.
#146
Re: LAFHA - New Offer and July impacts?
Are you able to say what in financial industry? I might be able to comment on the deal on the table if so.
#147
Forum Regular
Joined: Dec 2011
Posts: 131
Re: LAFHA - New Offer and July impacts?
Sure, technology / operational risk. I was head of op risk for a large FTSE insurance firm and 100K was good pay for insurance, would have been low for a bank. The new gig is with a bank so I am also looking at this as a way to shift from insurance to banking longer term. The new job is reporting to a head of tech risk so a slight move down the org chart, but a move to banking where the pay is better in general vs insurance. (and more interesting in my opinion) My gut feel is it isnt a great offer but not a terrible one either.
#148
Re: LAFHA - New Offer and July impacts?
I originally moved from a 150k Gbp job in London to $ 200 AUD and the difference in Sydney was instantly noticeable - especially the rent at 1000 a week for a two bed apartment. I knew it was a lifestyle choice. It was still plenty however, I lived on the edge of the harbour and dined out often. The biggest financial hit (they moved my trading desk to Asia and I stayed in Oz) would have been lower bonuses than I got in the UK as the volumes of business were small. I also found the working hours were very difficult to manage as nothing happened until 3pm when Asia started trading and I found I was working until midnight every night. You can't front load any LAFHA elements as far as I know.
You have to make a lifestyle choice. Sydney is a nice city especially round the harbour. It has a low population and is far quieter than London and Hong Kong - where I had worked before.
You have to make a lifestyle choice. Sydney is a nice city especially round the harbour. It has a low population and is far quieter than London and Hong Kong - where I had worked before.
#149
Forum Regular
Joined: Dec 2011
Posts: 131
Re: LAFHA - New Offer and July impacts?
I think you hit the theme, at a certain salary level while it is a 'hit' you still live fine. I like decent meals and wine once in a while but I don't intend to buy a car or blow cash for no reason. I am happy with an apartment with a nice view that is newer and quiet and close to work. I'd actually be melbourne based not Syndey but the costs appear similar.
Interesting your comments on hours, one of the selling points I got was 40-50 hour weeks vs crazy banking hours. I was also told people in Oz have a better work / life balance vs Americans and to a lesser extent Brits although I have no idea if that is actually true. Always hard to know what is when you are being sold a job - if I really wanted work life balance I'd move to Argentina and drink coffee all day long and moan about 35 hour work weeks
Interesting your comments on hours, one of the selling points I got was 40-50 hour weeks vs crazy banking hours. I was also told people in Oz have a better work / life balance vs Americans and to a lesser extent Brits although I have no idea if that is actually true. Always hard to know what is when you are being sold a job - if I really wanted work life balance I'd move to Argentina and drink coffee all day long and moan about 35 hour work weeks
#150
Re: LAFHA - New Offer and July impacts?
I also think perhaps you are overstating the cost of living. You will be able to spend substantially less than $1000/week on rent in Melbourne. I wouldn't be too fixated in living right in the CBD either...the real life in Melbourne is in the ring of suburbs around the CBD...10-20 minutes on public transport and you will be there. I'm confident you'd find many, many suitable options < $500/wk.