litepurple

Hi all, there seems to be quite a few LAFHA questions on here of late. So here's another!

My company pays me LAFHA though it isn't in my contract. I understand that they do it for all 457 visa holders in the company, and they made it very straightforward.

However, it's come to light that they are basing my super off this taxable salary which is quite a shortfall. I've queried this and they sent me a link to the ATO website (the link doesn't work) to say they only have to pay 9% of taxable salary as LAFHA is a fringe benefit (fringe benefits are also something I haven't completely got my head around).

I accept the tax bit as probably being correct however in my contract I am contracted to have super at a higher rate than 9% and it states the minimum figure in $ which should be paid into my super - and less than this is now being paid.

For argument's sake, I'm contracted at 10%, paid $100k gross and receiving LAFHA of $50k. This means $5k is now being paid into my super when my contract states $10k.

The only reason I'm hesitant in pushing it at this stage is I don't want the company to say simply that they're going to withdraw administering LAFHA and spoiling it for everyone else. Though, I'm pretty sure I'm being paid less than I'm contracted - does anyone have any advice on how I should broach this or any experience of this?

LP

Bermudashorts

Super is normally a %, but if you have a contract syaing it should be a $ amount then by all means follow it up with HR.

If super is a % then it would of course only be on your salary and not on your LAFHA as this is not salary it is an allowance. Can't have it both ways.

bcworld

This is all a bit confusing...presumably your contract states what your salary is. If LAFHA isn't mentioned then are you saying that your employer actually pays you a salary lower than this and tops it up with LAFHA?

http://www.ato.gov.au/individuals/co....htm&page=7&H7

Beoz

How can they top it up with LAHFA? LAHFA reduces the taxable income. It is neither a bonus nor extra payment. All the company can do is support the poster's claim for LAFHA by verifying a tempory nature due to the temporary visa. The salary is the component where super applies. Poster needs to read up on LAHFA

Bermudashorts

Yes it is, LAFHA is an allowance as the name suggests. It is not part of "salary" although people might consider it all together.

Tonyc88

My employer does the same - my super is based on my salary which is reduced on paper due to LAFHA.

My super is lower than expected because of this

nurseval

I am really trying to get my head around all of this, is there not a very simple way of explaing what each means and what it all does..

What am I expect to take home after a payable wage etc.. sorry but it is really confusing and I want to get as much information before I get a job offer with a wage offer etc..

Bermudashorts

I kind of thought you were applying for a PR / skilled migrant visa from your otehr thread ... in which case the LAFHA conversation is not relevant to you.

Tonyc88

I'll try - but the simple thing to understand about LAFHA is that it's essentially increasing your tax free allowance.

Lets say you earn $100k. LAFHA is a tax break and you get a total of 25k LAFHA.

For tax purposes the tax man only sees $75k of you income as taxable, due to the tax break that is LAFHA (i.e you are getting 25k tax free allowance).

However this has the knock on affect of meaning your super is less because compaies base you 9% super on your taxable income.

nurseval

ohhhhhh ok.. yes it will be the skilled migrant.. soo many visas, not hard to get me confused lol

nurseval

oohhhh...

so how would my wages work out with tax etc, if my visa will be on the skilled migrant?

Tonyc88

I think it would be as a normal aussie resident. You get money, you pay taxes.

You're not on a temp visa so you wont get LAFHA.

bcworld

I think nurses often can get some breaks though with things like salary packaging mortgage payments etc...don't know much else about it though so won't say anymore than that.

Ian Lindgren

Hi,

My name is Ian and I am the CEO of PayMe Australia. We are the premier providers of LAFHA advice for employees and employers in Australia.
Unfortunately your employer is correct and the ATO permit it based on the link you were given. The one that works is: http://www.ato.gov.au/super/content.....htm&page=6&H6.

If you were not receiving LAFHA, and say your base salary was $100,000, then your super would be $9000/year.

However, if you are receiving at total of $20,000 LAFHA each year, then your base salary falls by $20,000 to $80,000 and super is $7,200.
So it is all up to employer discretion. I don’t do it to my team, because I feel I am reducing their super to my benefit, but hey unfortunately not every employer thinks the same way.

I guess all up, you benefit from LAFHA more than you lose in super, so you might have to accept it. However if your contract states 10% super the only real way to do anything in to approach Fair Work Australia, but then you might lose LAFHA because an employer is not required to pay it.

I hope that helps in some way.

Regards,

Ian Lindgren
CEO PayMe Australia
www.payme.com.au/LAFHA.html

ennyl

hi ian,
could you advise, just moved from uk to canberra on 457 visa, I enquired about lafha with my australian employees before i left the uk but they new nothing about it (health authority). Could you give advise me if i am entitled to it (i have a home in the uk which i am renting) and if so how I go about claiming it,
thanks