Lynn-11

I'm sorry to post a question that I have seen on here a number of times, but after days of going through numerous sites and threads, I'm still none the wiser.
I have LAFHA included in my package, my new employer in Melbourne is factoring approx 20,000 for rent. Looking at property in the CBD I'm finding it hard to find anywhere that I would want to live, if that was the rental threshold. I will be living on my own.
Please could someone give me a guide as to how much I could pay that would be acceptable by the ATO ?
What would happen if I rented somewhere that was over this ?
Many thanks in advance

bingobob777

Just going through this myself. Employer is only willing to stump up $450 a week in LAFHA, my rent is going to be $900.

$450 a week is fair for someone of my seniority with a family of four apparently. Pure garbage, to get a nice 4 bed house with pool for $450 I'd need to move a couple of hundred Km inland

They don't have to give it I was told, so I just shut up at that point.

litepurple

I'm just going through it though my employer seems to be quite used to it: they just ask for the lease then ensure the rental amount doesn't amount to an improvement in your standard dwellings than you have back home - just so the company isn't liable for fringe benefits tax.

Lynn-11

Thanks for responding...
For example I own a 2 bedroom flat back in the UK (Central London), how will they determine what an improvement would be ?

litepurple

The impression I get is that if you go for something better than that here: so a 3-bed house/flat overlooking the Harbour Bridge might be considered an improvement. I must stress this is what my company has stated to me. It seems to me from this site that some companies do it differently.

Lynn-11

Thanks..
I'm looking at 1-2 bed in Docklands (Melbourne). Nicer area than I have in London, but rent would be similar if I rented my place out in the UK. So sounds like it could be workable ... ? Guess I need to discuss further with my employer.

steen1976

God well we'll be screwed for Lafha moving from Sunderland to Sydney

Pomster

the amount of LAFHA depends on your company....not aiming for the same standard as you would have elsewhere.

In 2000 my company gave us LAFHA of 400bucks a week, and we could go where we wanted. It got us a very nice 3 bed house in Hawthorn.

We lost it in 2002, but I gather the rate has not greatly changed. The company pays this as a tax free amount, so it is a perk. You can negotiate but not sure saying you want a $900/week rental will hold much water.

$900/week in Melbourne seems pretty high to me, so good luck if your company do agree to pay this.

stevenglish

Fair play to you if you get the $900, but $450 sounds about average, they also take your food bill into account so that'll boost it a bit. $26000 a year I got if memory serves, but remember that's only what the tax man won't see, not what you'll see in your pocket.

It's a bugger when it's gone though, good luck

Lynn-11

LOL, I'm looking to pay around $500 a week, the the allowance the company are talking about works out to be about $385 a week. What would happen if I paid $500-550, would I get the $385 portion tax free ? What happens if I convince the company too up it, to say $500 and the AOL look at it and decide that it's too much ?

ozhappy981

The company will pay you $385 a week as the rent component of the LAFHA plus the food component of the LAFHA. The LAFHA is the tax-free component of your salary. You can choose to spend whatever you want on rent and food. You do not have to account to anybody what you spend your money on.

If the ATO look at it and decide the employer paid too much, then the employer has to pay fringe benefit tax.

Lynn-11

Thank you so much, I'm clear now (at last) So I can have the appartment I want after all, it's just that the rent won't all be tax free.

ozhappy981

Just to make sure ...: Your employer will pay you your salary. For tax purposes part of this will be tax-free (the LAFHA part).

From your salary, you will be responsible for paying all your rent, all the food you buy, and everything else you buy. (Your employer does not pay part of your rent or part of your food ... you pay all from your salary.)

Lynn-11

Thank you, and all clear. Spoke to my employer regarding the amount of money that they were building in for the rent component and they agreed that for my seniority, and overall package that the $500-550 was reasonable. Too keep them in the clear they have just asked if I can give them a copy of my contract once I have an apartment to show the amount of rent that I am paying.

Alan Collett

http://www.gomatilda.com/news/article.cfm?articleid=702

For reference - we have received notification of this in a general email issued by the ATO today.

Of course what is "excessive" is in the eye of the beholder.

Best regards.