LAFHA in basic language...
 

:o Hi I really don't understand the concept Of LAFHA.
we are going to Sydney 28th July on a 457 visa and my hubby's company are paying LAFHA, but how exactly does it work ??
Do you get the money in your pay ?? Or do you just pay less tax ??
Could some one explain in real basic terms for a dim person how this will benefit us ??Thanks in advance

Re: LAFHA in basic language...
 

Hi,

I'm no expert on LAFHA but I came over here on a 457 and get paid it.

Basicly it means you get more cash in the bank each month. I think it works like this:

If you are being paid $80k you will get an allowance for rent and food which is tax free (the amount is dependent on circumstance ie. single, no. of children etc.

If your total LAFHA allowance comes to $25k, you will only pay tax on $55k. So in cash terms u'll be getting about $8k per year more than the non-lafha equivalent.

Hope that helps, the numbers I used are just to illustrate how it works, your company should provide you with a calculation of the allowances they have used.

Cheers

Simon

Re: LAFHA in basic language...
 

You pay less tax. The LAFHA amount, both rental and food, is taken off of your earnings before Tax is applied, then given back.

You won't actually know anything about it, you just get your monthly salary as is. The only time you would ever notice any difference is if a work colleague who is on the same salary as you but not in receipt of LAFHA showed you their take home pay!

Re: LAFHA in basic language...
 

Very much what Paddyo said (We Agree!!!)

It's a lovely little tax loophole because the accomodation amount is decided between you and your employer, not defined by the Taxman. It can be very good for your take home indeed.

Re: LAFHA in basic language...
 

lol