michell

Hi ,
Now i am probably going to sound like a really dumb blonde in asking this question , but here goes,
Hubby has been offered a 457 sponsorship visa, now we are in the process of getting all the paperwork together, but i dont want to commit to anything until i know most of the facts etc on the 457 and the LAFHA

so here goes, if say hubby is on $55,000 per annum and we can get LAFHA on renting and food allowance now does this mean hubby will get extra in his wage packet each week or not is basically what i want to know! sorry bit blunt but thats what we need to know. We are a family of 6, me , hubby and 4 kids all under 10 , so a yes to this question would be a real +++ for us

thanks for looking

michell

NickyC

IF you get LAHFA you get more in your paypacket than if you didn't get LAHFA.

LAHFA doesn't increase your gross pay, but it does decrease the tax you would pay so you do see more in your paypacket.

Katherined0

Also on a 457 you would pay more for private health cover as you are only covered for immediate and necessary health treatment throught the reciprocal health agreement (presuming you are entitled to NHS care) so factor this into the wage.
I dont know where you're heading to but in NSW on a 457 you also have to pay school fees of $4610 a year per child for state schooling (would add up with 4 children!) which it might be worth trying to get your employer to agree to pay. I know this is not the case for other states so check with the dept of education for the state you are moving to.
LAFHA is a nightmare to get your head round but if the employer is offering it, then you have a head start and basically it means more in your pay packet. However as it is awarded through the tax system you would lose this additional income should you ever get permanent residency, buy a house in Aus as you will no longer be living away from home.
Some sites I have found useful to explain LAfHA in the past
http://www.brainbox.com.au/brainbox/...5?opendocument
http://www.gomatilda.com/news/docume..._Allowance.pdf
http://law.ato.gov.au/atolaw/view.ht...%20benefits%3B

jayr

Very roughly, your RENT will be free of income tax. If you BUY you do not get that concession.

Let say your rent is $20k per annum and your marginal income tax rate is 30%. You will be $6000 ($20,000 x 30%) better offf by having LAFHA on the rent component alone. Food allowance will add another few $1000.

Do a search on this forum on LAFHA for more detail.

ANother poster advised that private medical insurnace is more expensive on 457. This is true but you DON"T HAVE TO have private insurance; if you are a pom then the reciprocal medicare agreement covers a lot (but not everything).

Please understand what a 457 is before you commit. It is a FAST way of geeting in but does nothing directly to assist in staying here longer term or in gaining Permanent Residence. Also note the restrictions on buying a house (which will result in a loss of LAFHA) and that some states (not QLD) will charge for public schooling.

Sandra

http://www.gomatilda.com/news/docume..._Allowance.pdf

This is the simplest explanation I have seen.

I do have a question of my own - I thought there used to be a minimum earnings to assign LAFHA to - is this still the case?

paddyo

Yes, a list of which is on the ATO website.

paddyo

Simple answer, if offered LAFHA on a 457 then take it!!! It gives you a allowance for Rent and Food which is taken off of your salary before tax is applied, therefore you GAIN in your take home pay.
Forget about perm residency et al, just stick with your immediate issue which is entry and employment under 457 Visa and its associated restrictions.
On a 457, medical is covered by reciprocal healthcare, just like NHS, I know because on day 2 of arriving we had to take our son to hospital for lacerating his chin, was no problem at all to get seen and thier opinion was that his injury was the main issue, not the payment!
Depending on where you live and work etc it could, theoretically, increase your hubbys take home pay by 1/3 rd.
Also, ask about Super, which is similar to a compulsory NI contribution, its 9% of taxable salary and you need to ascertain whether your hubbys package is inc or exc of Super.
Enjoy!

Sandra

I know the values for food etc - I meant was there a minimum total earnings under which you cannot apply LAFHA I could not find this amount on the ATO site.

paddyo

I know what you meant, I thought they was on the ATO website. Unless they are on the DIAC website under 457 regulations. I did have the link once but it has disappeared!

jayr

Ahh yes, the "user friendly" ATO website....

I think what you may be referring to is the MINIMUM CASH COMPONENT whihc you must take as cash salary. I cant remember whethere this is something that is specific to LAFHA or more generally applies to salary sacrifcice items.

Anyway, when Iused to get LAFHA I believe the minimum was $35k and I undertstand it may now be $45k.

Forthe OP on a salary of about $55k this may imply that LAFHA could be limited to $10,000, and the tax upside (assuming 30% marginal) would then only be $3,000 per annum - still better than a kick in the teeth I suppose

Sandra

Great that it is - I was concerned with the OP basic that LAFHA might not be as good as it seems. I know my LAFHA was fine when I came over but we came close one year with schools fees and other expenses.

So the advice then is to ensure you have a good tax accountant working for the company to check this limit with.

Thanks

Sandra

Thanks the link or at least more information is on the DIAC site

http://www.immi.gov.au/skilled/skill...ccupations.pdf

This does change the calculation of LAFHA quite a bit for a salary of 55K - because it is going to depend on the region of the 457 visa etc. Am I reading it correctly and tt is possible from what I read that the LAFH cannot be applied to under basic of 57K for specific regions.

I know I had a salary component that LAFHA could not be applied to.

jayr

This is indeed a source of much confusion. For clarity, any minimum specified salaries for 457 purposes are irrelevant for LAFHA purposes.

That is, the 457 minimum salaries have nothing to do with any requirements to take some of it as cash; that is an ATO issue whereas minimum salary levels are a DIAC issue.

The relvant minimum thing for LAFHA is the MINIMUM CASH COMPONENT which ahs nothing directly to do with salary (though clealry it does indirectly)

northernbird

Unless you get a GP that bulk bills you will have to pay to see the doctor. Can claim back $32 of any charge. Our GP charges $50 so we are out of pocket when we have to see a Doctor. Some other things such as xrays, scans etc can attract a fee where only a % is claimed back. Hospitals are usually fee free. Also not forgetting that prescriptions have to be paid for even for children.


Also keep in mind that technically you are supposed to have private health as a condition of a 457. Some employers will write it into a contract that you have to take out a policy. Some employers will pay the premium but that is to be negotiated.

Also school fees are payable for 457 holders in NSW and possibly ACT. No fees in Vic, Qld, SA and WA.

paddyo

You are correct in all that, but as I said to the OP who was only asking about the LAFHA on a 457 just concentrate on that for now. Then they can look at the other aspects.
We have 2 bulk billing med centres in Manly area so are ok and I am lucky enough to have a private health scheme with my job. Just hope I don't have to use it!! As for school fees....Grrrrrr