Bill Frame

Hi,
Im some what confused having trolled through the various threads as to why this seems to be such a hidden gem,my understanding is for ease of nos sake if you earn 100,000 you pay (tax,medicare levi and private health care) all taken off the total ; however with LAFHA the following is allowed

earn 100,000, you are given a food and housing allowance tax free that your employer arranges, up to 40,000 for a family of 4 meaning your taxable salary is reduced to
60,000 then pay (tax, medicare and private health care) and then add back on the 40,000 allowance meaning you are about 16,000 better off hope this makes sense.

iamthecreaturefromuranus

It does, but not all employers will do it, primarily because they don't understand the system or simply can't be arsed.

mvagusta

From what I have read, I think you might find that your exempt from medicare on a 457 visa hence the reason for private health insurance. Although there is a reprociprical agreement for necessary treatment at public hospitals e.g if you break a leg or so.
Does your new employer support Lafha? Are you aware that if you get Pr status then lafha stops.

colonel

LAFHA does not stop when you "get Pr status". It stops from the moment you apply for PR ! Hence the reason to negotiate a new deal prior to the PR application being lodged

mvagusta

Is Lafha possible on a smaller salary say 50000 or does only benefit people on a higher salary?

iamthecreaturefromuranus

It works for everybody... BUT, there are minimum wage levels where you can actually come to Australia on a 457. $50,000 is below that level for some professions.

paddyo

Bill, you have some confusing points.

To be clear, LAFHA is a tax incentive for all working in Australia away from home. But, for the sake of this type of forum it mainly applies to those on Long Term Business Visa's (457). You are not eligible on a WHV AFAIAA.
The figures you have used are not at all what you should go by, the salary is nothing to do with it, however to be on a 457 you have to remain at a Mininum Salary level (MSL) which is the minimum taxbale salary you can earn.
You have probably been working off of someones previous post based on their personal circumstances. The LAFHA amount is variable but based on 2 factors, your rent and your food.
The food element is a predetermined weekly figure set by the ATO and these figures can be found on the ATO website, it is based on numbers of adults and children in ther same dwelling.
The rental element is more subjective and is based on a 'reasonable' weekly figure for your family size and the cost of rentals in your area and is usually set by your company but can be negotiated. Mine was initially set at $500 but then increased when I got here to match my actual rent.
However, where the MSL comes in is that when you have subtracted your calculated LAFHA sums from your salary, that salary must still be at or above the MSL. Remember that you also have to take into account Medicare and any Novated Lease that you might have as well as your Super arrangements.
As another OP mentioned, it is NOT mandatory for companies to either offer it or manage it, mostly those that don't are simply ignorant of how easy it is to implement or have lazy Pay staff who simply cannot be arsed to even go that extra bit to assist you. Might be different if they was eligible for it!
The real value in LAFHA is that it gives you extra money in your pocket as a tax incentive to temporary located workers.
Remember the major pointsL; it is NOT mandatory so by all means ask but don't get p!ssed off if they say no, just try and negotiate it and slowly but surely convince them that it IS not a financial burden to them. Secondly, as soon as you apply for PR it has to be stopped as then your intention is to NOT return to your permanent residence.

Gems

As others have said, just becaus LAFHA is available doesnt mean your employer will do it.
Hubbies employer would not do it, when we asked shortly after arrival.

So I would not factor it into your salary unless you know your employer has agreed.

Gems

JBJ14

Reason being is sometimes the company has to pay fringe benefits tax on LAFHA. Meaning that by paying you $300 LAFHA, they also have to pay $300 to the tax office costing them $600. This is not always the case though, depends on the amount of LAFHA that is for food and the amount that is for other expenses

One of the highest taxed places in the world here ..... lots of nice hidden ones!

Cheers
Wayne

ABCDiamond

Not many people realise that.

JBJ14

Nope ... it's not just the company being difficult! But there are other ways to get salary at lower tax rates (legally)

paddyo

FBT is almost negligable for Food and Accom, its when salary packaging comes into it that it gets costly for the company.

ABCDiamond

The problem from an employers perspective, is that unless they are used to doing LAFHA and FBT, they read the FBT manual, then consider the cost of getting an accountant to sort it out, and then decide... "too hard basket".

A very small part from the FBT Manual
Well worth reading for those interested. Pages 38, 39, 40 and 41.

steen1976

Going to be asking for this from my wife's prospective employer. They have employed quite a number of staff from abroad in the past and it's a fairly large state government employer so hopefully they are used to it and will do it. It'll make one hell of a difference.

JBJ14

Totally agree ... although FBT is on the list to be scrapped in the coming years according to the last CPA seminar