australia11

Hi folk,

been offered LAFHA from my new employer. but slightly confused on how it works. lets say base salary is $75k how much per month would i be better off. family of 4. is LAFHA worth having if offered buy employer.
cheers

bingobob777

Family of 4 will be entitled to roughly 15k LAFHA for food. This 15k becomes a tax free part of your salary, instead of being taxed on 75k you are taxed on 60k.

You then get a rent component of LAFHA, assume rent of $500 a week, that then equates to $26k a year. This is also tax free. So your taxable salary is further reduced to 34k.

You are then taxed on 34k rather than 75k, which give or take a bit works out at 1k extra in your pocket a month. There is a calculator on the site some where.

australia11

Hi bingobob
thats how i thought it worked, so you think its worth taking.
Andy.

bingobob777

Alan Collett

http://www.payme.com.au/lafha.html

Consider exploring with these guys ...

Best regards.

australia11

Thanks Alan, that was helpfull.

Andy.

Ian Lindgren

Hi Andy,

I’m not sure if you have had a look at the web site that Alan Collett mentioned (and thanks for that by the way Alan!), however if you go straight to our LAFHA calculator you will be able to identify that additional cash in hand you would receive if you were eligible and if your employer agree to pay LAFHA.

Sure, this has its limitations because we cannot give our intellectual property away for free, but I hate to see Visa holders missing out on what they could gain. I know it is based on $350 per week rent, but if you can reasonably claim more based on your salary and family make up, then your cash in hand will increase. With a family of four, assuming two are children under 12, you go from $191/wk food allowance for one adult to $293.

Let’s get you focussed on LAFHA and the knowledge base about LAFHA in Australia by professionals. LAFHA is arguably the most misunderstood and underulitised allowance in Australia for three reasons:

• The first reason is that there is no one repository of current knowledge on the ATO web site,
  
• The second reason is that LAFHA has the word "Allowance in it". This means to most people, that they have to pay you more! When in fact your taxable salary is reduced by the LAFHA amount you claim, so there is no more for your employer to pay. They pay less tax on you, and you get in the hand what they do not pay.
  
• The other reason is that LAFHA is administered under the Fringe Benefits Tax (FBT) Act, and because people (including accountants, CFOs and payroll officers do not know all there is to know about LAFHA), they automatically take a defensive stance and say "No to LAFHA" because they think it attracts FBT.

So in short, LAFHA does not attract FBT if paid correctly, and it does not require your employer to increase your salary package.

PayMe can assist you in providing the advice your employer needs to be sure that they can legitimately pay you LAFHA, and it allows them to confidently make the decision as to how much they will pay you.

Lastly, always remember that LAFHA is not an entitlement; it is only paid if your employer agrees to pay it.

Regards,

Ian

australia11

HI Ian,
thank you for the information, it makes it a little bit easy to understand.
Andy....

paddyo

75k for a family of 4...where are you relocating to?
Its doable but might stretch you if your OH is not working and you want childcare. If your children are of school age also bear in mind that, in NSW only, you have to pay $4500 per annum for your childs education in public schools.
If your company have offered you LAFHA then they should know what they are doing, but ask THEM to provide you with a breakdown and a ROM of a monthly pay statement, that way you can ascertain yourself what your take home pay will be. My company gave me a speadsheet with sets of salary figures which gave 'with LAFHA' and 'without LAFHA' figures. Finally, your Taxable Salary cannot go below a Minimum Taxable Salary (MTS) figure which is something like 47k (check with your potential employer) so that may mean reducing your LAFHA to remain above that threshold.
Finally, by all means use the advice that you will get on here, but it rests with your company as to how they administer it and their decision will be final so be wary of challenging them, at least till you get here!!

australia11

Hi paddyo, thank you for that we are going to bunbury wa, yes i will be leaving it till we arrive in bunbury to sort out.
Andy.

paddyo

Bunbury should be fine to settle on 75k, here is a link to Domain.com and I have set a search for 3 bed places between 300-500pw rental. Hope it helps!!
http://www.domain.com.au/Search/rent...rom=300&to=500
By the way, you can NOT get a rental until you get here as you have to view the property yourself first. It protects both you and the rental agent and when you get here and see the properties compared to the sales pics you will understand why!!
Has your potential employer offered short term temporary accom while you look for a place? It is usual to do that, property search can be a stressful time especially for the OH while you are at work and she has the kids to sort out as well. My employer gave me the use of a relocation agent so they could drive my wife around to view properties, knowing the areas, and also you can get viewings outside of normal times.

paddyo

actually, sorry for the implication about 'she' being the other half!! Whoever is the stay at home parent initially will find it stressful finding a place in a new country.