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LAFHA - Budget 2012/13

LAFHA - Budget 2012/13

Old May 12th 2012, 5:45 am
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Default Re: LAFHA - Budget 2012/13

You can not look at LAFHA in isolation. You have to look at all the effects of Australia's different treatment (re. tax and other) of 457 holders when compared with Australian nationals/foreign PRs.

With LAFHA tax benefits removed, the 457 holder becomes disadvantaged compared to Australian nationals/foreign PRs.

If from now on, Australia doesn't want to attract expertise from abroad then that's fine, however if it does then there will be trouble because anyone out there worth his salt, and with a choice as to where he can work, will without doubt stick two fingers up to Australia.

I am not talking about people wishing to emigrate to Australia. I am talking about people who have been offered a job in Australia so have to move to Australia to take up that job; i.e. they have no particular desire to go to Australia other than the fact that it's where the offered job is - there are a lot of this type of people in the oil & gas and mining industries.

This week I met a director of a well-known recruitment agency (with worldwide activities), in Perth. He was here investigating his struggling Perth office. He explained that his office simply can not get sufficient interested people of the right calibre to present to his oil & gas company clients. He said the expertise was not available locally, and potential candidates from abroad pull out as soon as they hear the work is in Australia.

Australia has been doing well economically, when other countries are in a debt mess. But Australia is now well on the way to fu**ing it up.

This LAFHA thing is bigger than people initially think. It tips the balance and means Australia is not attractive to foreign expertise, plain and simple.

I rest my case.
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Old May 12th 2012, 5:56 am
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Default Re: LAFHA - Budget 2012/13

Originally Posted by cubeonly
I rest my case.
I know a couple, no kids in receipt of LAFHA who rent at well over $1000pw...purely because of the LAFHA...and with an income generating property in the UK. That lifestyle is funded by money that should be in the treasury coffers. That is an effective subsidy be the Australian taxpayer. Do you agree with that? Because they brought skills? Should we extend tax free income to people who fill skills gaps on PR visas too?
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Old May 12th 2012, 5:58 am
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Default Re: LAFHA - Budget 2012/13

Another thing.

Australian companies/agencies have been dangling the LAFHA tax benefits as a carrot and building it in to their employment contracts for many years.

Whether they were right or wrong to do this is a separate discussion.

But what I want to recognise here is the fact that they HAVE been doing this and have done so, for many years. Because they've been doing it for so long, it will have influenced the market day rates/salaries.

Now look to 1 July - it stops dead! So because of the above the effects could be difficult if not impossible, complex and take years to resolve.

E.g. two employees in a company doing similar jobs, one 457 and one Aus national - currently on similar salary (they have to be don't they?). Then LAFHA benefits taken away from the 457 employee so he asks for salary increase - the company is in a difficult situation because they can't really increase his pay because he would then earn a lot more than his Australian national colleague. So the 457 employee does not get his rise and from then is disgruntled; he might quit, or just suffer in silence.

What I am trying to explain here is that it is not as simple as martin1978 tries to make out.

Of course, the jobs market is a supply-and-demand situation, however the supply-and-demand parameters here in Australia have been influenced by the LAFHA benefits for many years, and from 1 July there's a step change the effects of which should not be underestimated.

Last edited by cubeonly; May 12th 2012 at 6:05 am.
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Old May 12th 2012, 5:59 am
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Default Re: LAFHA - Budget 2012/13

Originally Posted by bcworld
I know a couple, no kids in receipt of LAFHA who rent at well over $1000pw...purely because of the LAFHA...and with an income generating property in the UK. That lifestyle is funded by money that should be in the treasury coffers. That is an effective subsidy be the Australian taxpayer. Do you agree with that? Because they brought skills? Should we extend tax free income to people who fill skills gaps on PR visas too?
Hi, I am sorry I do not agree, because the situation is far more complex as I have tried to write about just now.
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Old May 12th 2012, 6:05 am
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Default Re: LAFHA - Budget 2012/13

Originally Posted by cubeonly
Another thing.

Australian companies/agencies have been dangling the LAFHA tax benefits as a carrot and building it in to their employment contracts for many years.

Whether they were right or wrong to do this is a separate discussion.

But what I want to recognise here is the fact that they HAVE been doing this and have done so, for many years. Because they've been doing it for so long, it will have influenced the market day rates/salaries.

Now look to 1 July - it stops dead! So because of the above the effects could be difficult if not impossible, complex and take years to resolve.

E.g. two employees in a company doing similar jobs, one 457 and one Aus national - currently on similar salary (they have to be don't they?). Then LAFHA benefits taken away from the 457 employee so he asks for salary increase - the company is in a difficult situation because they can't really increase his pay because he would then earn a lot more than his Australian national colleague. So the 457 employee does not get his rise and from then is disgruntled; he might quit, or just suffer in silence.

What I am trying to explain here is that it is not as simple as martin1978 tries to make out.

Of course, the jobs market is a supply-and-demand situation, however the supply-and-demand parameters here in Australia have been influenced by the LAFHA benefits for many years, and from 1 July they suddenly won't be.
Are you on a 457 visa for longer than 2 years and claiming Lafha? LAFHA was supposed to be a temporary benefit for temporary visa holders who may be moving home or unsure about staying in Australia. People accepting Lafha for longer than 2 years are hardly temporary anymore.

Like I said before, it's not right to take it off people without much notice. It'll be tough for them, definitely. But Lafha would never be sold by companies as a permanent benefit.
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Old May 12th 2012, 6:11 am
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Default Re: LAFHA - Budget 2012/13

Originally Posted by elice_in_oz
I think 'naively' is the operative word in your rant above. As others have said, if you planned your life and finances around the LAFHA, you should also have kept in mind that NOTHING is constant in politics and finances. The GFC has shown us that. Previous governments have shown us that too, by moving many of the goalposts for handouts and tax relief over the years.

I remember when Labour first came in and some of the means-tested handouts became unavailable to many because the income thresholds were lowered. It annoyed me at the time (although we were still on a 457 awaiting our PR then) because we fell in that murky area of being just over and so not really wealthy, but as I had never counted on that money to finance my lifestyle, I didn't find it a big deal. It would have been a nice bonus to get it but it made no difference not to get it. LAFHA should have been looked at in the sameway by recipients from foreign lands.

And yes, I did find it annoying that a tax relief that was meant for people who were sent interstate for work and had to MAINTAIN 2 homes was being used by people who were coming from overseas and renting out their house (or even worse, not even having a house any more - I have friends who did that) in the UK or elsewhere. Those people were lucky it lasted as long as it did. It's over now, build a bridge and get over it.

Now for the million $ question: which government will have the balls to reform negative gearing?
I'm sorry, but when you are offered a temporary role here and to offset your living costs a tax benefit is included then WHY should I not think it is a normal everyday component of life?
I am worldly but not in a financial sense so when I tallied everything up and resolved the 'is it or isn;t it worth it' costs then it agreed with me. To now lose all the benefits has radically changed our circumstances and with what consultation? Yes I did plan life with LAFHA, thats what was offered to me and it was never even implied that it may go. One persons naivety is another persons skill........doesn;t make them less of a person.
If the company loses me because I would rather return to UK than live in reduced circumstances, oh by the way yes I am making a loss on my UK home so it does have some validity for me, then there is no way they will increase my salary to such a large extent to placate me. Why should they? Am I valued by my company, yes. Do I provide a key role which not many have the same skill sets for, yes. Am I indispensible...no way!! They will make do, as I would expect them to.
To those who are financially astute and politically savvy, well done, you called it right. To those of us who are not, bad luck folks but you will get no support on here from those who see you as a financial fool.
It really really irks me to read some comments which, rather than say,"Hey, I know its not fair to YOU and YOU will obviously have some financial difficulty with this but I actually agree with the loss of LAFHA' ,which I could take as its a recognition of people, families, children actually HAVING to change their whole lives because of this, but no, instead it a'your an idiot why did you think LAFHA would be permanent and anyway I never had it so tough' comments.
THATS what annoys me....I can take argument, I can take difference of opinion, I love debate, but I DO NOT like selfish inconsideration just because your not affected.
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Old May 12th 2012, 6:14 am
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Default Re: LAFHA - Budget 2012/13

Originally Posted by knockoff nige
Are you on a 457 visa for longer than 2 years and claiming Lafha? LAFHA was supposed to be a temporary benefit for temporary visa holders who may be moving home or unsure about staying in Australia. People accepting Lafha for longer than 2 years are hardly temporary anymore.

Like I said before, it's not right to take it off people without much notice. It'll be tough for them, definitely. But Lafha would never be sold by companies as a permanent benefit.
Ref. your last sentence I absolutely agree if your "would" is replaced with "should". But whether we here think it is right or wrong for them to do that is irrelevant - the fact is that the companies HAVE been selling it and incorporating it in to employment contracts for many years. When I was negotiating re. my Perth job late last year I didn't give a flying f*** about LAFHA but then I received a contract with LAFHA all over it. Having the LAFHA in the contract forced me to negotiate the day rate but looking at net value not gross value as I would normally do! So now on 1 July I will be expecting my company to do something about it or there has to be trouble of some sort - the fact is i'll be GBP 12 grand out of pocket from 1 July. I really don't give a t*ss as to whether LAFHA is fair in that it would seem on the surface that Australian nationals are funding employees from abroad from their tax dollars (which incidentally I would say is a grossly incorrect argument), all I care about is that this sodding LAFHA crap is built in to my employment contract so come 1 July I'm in a mess and will go to work in a mood and with a headache! So my thoughts right now are "sod it I'm off to Asia or Russia or Middle East".

Last edited by cubeonly; May 12th 2012 at 6:25 am.
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Old May 12th 2012, 6:18 am
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Default Re: LAFHA - Budget 2012/13

Originally Posted by paddyo
I'm sorry, but when you are offered a temporary role here and to offset your living costs a tax benefit is included then WHY should I not think it is a normal everyday component of life?
I am worldly but not in a financial sense so when I tallied everything up and resolved the 'is it or isn;t it worth it' costs then it agreed with me. To now lose all the benefits has radically changed our circumstances and with what consultation? Yes I did plan life with LAFHA, thats what was offered to me and it was never even implied that it may go. One persons naivety is another persons skill........doesn;t make them less of a person.
If the company loses me because I would rather return to UK than live in reduced circumstances, oh by the way yes I am making a loss on my UK home so it does have some validity for me, then there is no way they will increase my salary to such a large extent to placate me. Why should they? Am I valued by my company, yes. Do I provide a key role which not many have the same skill sets for, yes. Am I indispensible...no way!! They will make do, as I would expect them to.
To those who are financially astute and politically savvy, well done, you called it right. To those of us who are not, bad luck folks but you will get no support on here from those who see you as a financial fool.
It really really irks me to read some comments which, rather than say,"Hey, I know its not fair to YOU and YOU will obviously have some financial difficulty with this but I actually agree with the loss of LAFHA' ,which I could take as its a recognition of people, families, children actually HAVING to change their whole lives because of this, but no, instead it a'your an idiot why did you think LAFHA would be permanent and anyway I never had it so tough' comments.
THATS what annoys me....I can take argument, I can take difference of opinion, I love debate, but I DO NOT like selfish inconsideration just because your not affected.
Fully support you paddyo. Great post.
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Old May 12th 2012, 6:18 am
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Default Re: LAFHA - Budget 2012/13

Originally Posted by cubeonly
Another thing.

Australian companies/agencies have been dangling the LAFHA tax benefits as a carrot and building it in to their employment contracts for many years.

Whether they were right or wrong to do this is a separate discussion.

But what I want to recognise here is the fact that they HAVE been doing this and have done so, for many years. Because they've been doing it for so long, it will have influenced the market day rates/salaries.

Now look to 1 July - it stops dead! So because of the above the effects could be difficult if not impossible, complex and take years to resolve.

E.g. two employees in a company doing similar jobs, one 457 and one Aus national - currently on similar salary (they have to be don't they?). Then LAFHA benefits taken away from the 457 employee so he asks for salary increase - the company is in a difficult situation because they can't really increase his pay because he would then earn a lot more than his Australian national colleague. So the 457 employee does not get his rise and from then is disgruntled; he might quit, or just suffer in silence.

What I am trying to explain here is that it is not as simple as martin1978 tries to make out.

Of course, the jobs market is a supply-and-demand situation, however the supply-and-demand parameters here in Australia have been influenced by the LAFHA benefits for many years, and from 1 July there's a step change the effects of which should not be underestimated.
Therein lies the crux of it for many existing 457 holders. The company will not increase your salary to bring you up to LAFHA net levels, they would have to raise everyone who is equal to you and it is not fiscally sensible. I understand that.
The length of your time here has no bearing on whether or not you are still 'temp' or not. My initial plan was to do my time here and return to my job back in UK. I am still a 'temp' and still in receipt of LAFHA, my life was, is and will be planned around it now and then resolving its loss on 1 July. Do I stay or do I go....I really really don't know as its not just ME is it? Its my wife and son as well, its the job I like here, its the life we have right now. So many things will change.
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Old May 12th 2012, 6:22 am
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Default Re: LAFHA - Budget 2012/13

Bottom line for me, it's a "f*** 'em I'm off" response.

I'm on oilcareers.com right now, and yesterday I had 2 phone calls from agencies in UK!
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Old May 12th 2012, 6:23 am
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Default Re: LAFHA - Budget 2012/13

Originally Posted by knockoff nige
Are you on a 457 visa for longer than 2 years and claiming Lafha? LAFHA was supposed to be a temporary benefit for temporary visa holders who may be moving home or unsure about staying in Australia. People accepting Lafha for longer than 2 years are hardly temporary anymore.

Like I said before, it's not right to take it off people without much notice. It'll be tough for them, definitely. But Lafha would never be sold by companies as a permanent benefit.
As I said before, I understand your comments. You do not agree with LAFHA but do empathise with those suddenly losing it, I get that and can see your point of view. However, my LAFHA was sold to me as a permanent benefit all the time I am a temp resident.
I know it has been abused, I know it should of been managed and controlled better, I know that seems a 'gimme' for some. But, it does matter to those who genuinely have financial costs to cover back in their home country which LAFHA made the decision to come to work in Oz for.
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Old May 12th 2012, 6:30 am
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Default Re: LAFHA - Budget 2012/13

Originally Posted by paddyo
As I said before, I understand your comments. You do not agree with LAFHA but do empathise with those suddenly losing it, I get that and can see your point of view. However, my LAFHA was sold to me as a permanent benefit all the time I am a temp resident.
I know it has been abused, I know it should of been managed and controlled better, I know that seems a 'gimme' for some. But, it does matter to those who genuinely have financial costs to cover back in their home country which LAFHA made the decision to come to work in Oz for.
The fact is that by dangling LAFHA carrot and incorporating it in to employment contracts, companies/agencies in Australia have been getting foreign workers here under false pretences for years and years. It stinks, but this has been the regime for years - I believe the effects of suddenly and drastically changing the regime on 1 July are or will be grossly underestimated by many including the Australian government.

Last edited by cubeonly; May 12th 2012 at 6:32 am.
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Old May 12th 2012, 6:43 am
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Default Re: LAFHA - Budget 2012/13

Originally Posted by cubeonly
The fact is that by dangling LAFHA carrot and incorporating it in to employment contracts, companies/agencies in Australia have been getting foreign workers here under false pretences for years and years. It stinks, but this has been the regime for years - I believe the effects of suddenly and drastically changing the regime on 1 July are or will be grossly underestimated by many including the Australian government.
If your employer advised you that LAFHA would be permanent then you'd need to take that up with them.

However, if your belief was that you could live on a temporary visa forever and accept LAFHA for as long as you do, then perhaps the temporary visa option wasn't for you.

I know Paddyo and it will be a shame if he's forced to leave because of this. And best of luck to anyone who has to react to it.
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Old May 12th 2012, 6:48 am
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Default Re: LAFHA - Budget 2012/13

My problem with the change in policy is the speed it was done at. Amid the confusion the other evening when it appeared it would officially end in 2 years i couldn't argue but to finish it so quickly goes against the grain.

I know quite a few people who have taken 1 year leases based on their take home pay and will now be under water.

These people took out the leases BEFORE the govt mentioned the LAFHA changes roughly 6 months ago.
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Old May 12th 2012, 7:12 am
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Default Re: LAFHA - Budget 2012/13

i didnt renew my lease due to waiting to see what the changes would be and how they would effect me.
I said in an earlier post and agree with Cubeonly this is going to have a bigger effect than most people think

Last edited by kmthor - mackay; May 12th 2012 at 7:15 am.
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