LAFHA under threat
Jan 6th 2012, 7:21 am
#196
Forum Regular
Joined: Jan 2007
Posts: 211
Re: LAFHA under threat
I had a question regarding LAFHA. I am currently in India, and looking for opportunities in Australia with my current employer. The usual route for my company to send employees to australia is the 457 visa, and their salary package includes a base amount + 'X' amount as LAFHA.
My question is , since I am a PR holder, will I be eligible for the same package (Base + LAFHA), or will the company have to give the entire amount as base salary ?
I currently own and maintain a house in India. I am interested only in the pre-july scenario
My question is , since I am a PR holder, will I be eligible for the same package (Base + LAFHA), or will the company have to give the entire amount as base salary ?
I currently own and maintain a house in India. I am interested only in the pre-july scenario
Jan 6th 2012, 8:01 am
#198
Forum Regular
Joined: Jan 2007
Posts: 211
Re: LAFHA under threat
Yeah Sorry, I had LAFHA when I arrived but as soon as we applied for PR it didnt stop straight away, when we got the approval stamp it stopped so if you already have PR, get an increase on what they are offering. :-)
Jan 6th 2012, 8:52 am
#199
Forum Regular
Joined: Sep 2008
Location: Mumbai
Posts: 163
Re: LAFHA under threat
So should I ask for Base + LAFHA as my base salary, or should I ask for something higher than that to offset the increased tax liability ? Mind you, this is all wishful thinking. I'll be more than glad just getting the job offer.
Jan 6th 2012, 8:59 am
#200
Account Closed
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Posts: 14,188
Re: LAFHA under threat
Jan 6th 2012, 10:19 pm
#201
Lost in BE Cyberspace
Joined: Dec 2010
Posts: 14,040
Re: LAFHA under threat
It would be nice if it was as simple as that. Some people currently in receipt of LAFHA for VALID reasons and who do own/rent homes in Oz and UK and moved over here based on the incentive/proposals put forward by the prospective employer now have a difficult decision to make. After being here for a year or so some families MAY have started to bed in with the community, the schools, the lifestyle and so to 're-negotiate or leave' is difficult.
Lets look at re-negotiate, and I have already started this process, as this is where your employer will show their colours. Far from some peoples perceptions (not facts, just assumptions they have made) the larger companies offer 457 holders comparable salaries with PT and Citizens, not lower salaries and so HAVE to offer LAFHA to make up the difference. LAFHA was an incentive and at no time was there any thought/discussion/inference that it may/would/could be withdrawn, why would it be? As the salary is comparable with your peers then it is difficult to give a significant raise above the window which is set for all of your profession/scale. I actually understand that and accept it. But, the word is difficult not unachievable so there is some room for decision and negotiation but I would expect only a token raise not a massive increase to match what you would get 'Net' if LAFHA was paid.
Then there is the 'leave' option. Wow, massive turmoil when you depart with regrets and almost 'forcibly'. Maybe leaving with no job to go back to, no support network, no guarentee of income. Maybe your home may not be available (if you rented out there are timeframes agreed, etc). It MAY be the best thing ever to happen, new opportunities and new paths to take. But, ultimately, HAVING to leave rather than WANTING to leave is a big difference and is not pleasant for anybody.
Lets look at re-negotiate, and I have already started this process, as this is where your employer will show their colours. Far from some peoples perceptions (not facts, just assumptions they have made) the larger companies offer 457 holders comparable salaries with PT and Citizens, not lower salaries and so HAVE to offer LAFHA to make up the difference. LAFHA was an incentive and at no time was there any thought/discussion/inference that it may/would/could be withdrawn, why would it be? As the salary is comparable with your peers then it is difficult to give a significant raise above the window which is set for all of your profession/scale. I actually understand that and accept it. But, the word is difficult not unachievable so there is some room for decision and negotiation but I would expect only a token raise not a massive increase to match what you would get 'Net' if LAFHA was paid.
Then there is the 'leave' option. Wow, massive turmoil when you depart with regrets and almost 'forcibly'. Maybe leaving with no job to go back to, no support network, no guarentee of income. Maybe your home may not be available (if you rented out there are timeframes agreed, etc). It MAY be the best thing ever to happen, new opportunities and new paths to take. But, ultimately, HAVING to leave rather than WANTING to leave is a big difference and is not pleasant for anybody.
Last edited by Pollyana; Jan 6th 2012 at 10:30 pm. Reason: fixing the quote :)
Jan 6th 2012, 10:29 pm
#202
Forum Regular
Joined: Nov 2011
Posts: 35
Re: LAFHA under threat
Let's look at what a 457 is in the first place. It's a visa designed to fill areas where local skills don't exist. It's not designed to give foreign citizens an avenue into Oz. If this is your desire perhaps you should jump on a skilled migrant visa. I will agree that this change will affect the personal situation of many 457 holders, but it needs to happen for the rest of taxpayers
just because you have PR doesnt me you will get LAFHA. your company may pay its own LAFHA which is project based ie if they ask you to work interstate on another project they may give you a tax free allowance to cover your housing interstate which they call 'LAFHA'.
Last edited by moneypenny20; Jan 7th 2012 at 12:03 am. Reason: Correcting quote.
Jan 6th 2012, 11:43 pm
#203
Account Closed
Joined: Jul 2006
Posts: 14,188
Re: LAFHA under threat
Let's look at what a 457 is in the first place. It's a visa designed to fill areas where local skills don't exist. It's not designed to give foreign citizens an avenue into Oz. If this is your desire perhaps you should jump on a skilled migrant visa. I will agree that this change will affect the personal situation of many 457 holders, but it needs to happen for the rest of taxpayers
South Australia sponsored visa's in particular, if what you read in the Immi forum is anything to go on, seem to be a joke, with most seeing it as "an avenue into Oz", just not that bit of Oz who sponsored them.
The changes to LAFHA are just a cheap shot at people who have no recourse... "you can't vote, so we don't care".
Jan 7th 2012, 6:08 am
#204
Lost in BE Cyberspace
Joined: Dec 2010
Posts: 14,040
Re: LAFHA under threat
How is that any different from a skilled migrant visa? If anything the 457 is a better way for Australia to fill skills gaps than the skilled PR route. 457's come over to do a particular job and fill a designated role. Skilled PR, especially it seems State sponsored PR, doesn't do that.
South Australia sponsored visa's in particular, if what you read in the Immi forum is anything to go on, seem to be a joke, with most seeing it as "an avenue into Oz", just not that bit of Oz who sponsored them.
The changes to LAFHA are just a cheap shot at people who have no recourse... "you can't vote, so we don't care".
South Australia sponsored visa's in particular, if what you read in the Immi forum is anything to go on, seem to be a joke, with most seeing it as "an avenue into Oz", just not that bit of Oz who sponsored them.
The changes to LAFHA are just a cheap shot at people who have no recourse... "you can't vote, so we don't care".
Edit. And also owns a property which the family live in. That's hardly temporary
Last edited by Beoz; Jan 7th 2012 at 6:15 am.
Jan 7th 2012, 6:54 am
#205
Account Closed
Joined: Jul 2006
Posts: 14,188
Re: LAFHA under threat
You seem to believe LAHFA is a 457 tax relief. I'd hazard a guess that more Oz citizens receive LAHFA then non citizens. I doubt very much this is a designed attack on 457 visa holders but instead a method to simply tidy up a floored tax break. I personally know 2 457 holders receiving it who don't own properties in the UK. One of which is married to an aussie and has a child born here and intends never to move back.
Edit. And also owns a property which the family live in. That's hardly temporary
Edit. And also owns a property which the family live in. That's hardly temporary
Will they be so quick to remove the 'tax' grabs that are imposed on 457's, particularly the school charges? I think we both know the answer to that.
It would be nice to think somebody would challenge the legality of those charges, particularly primary school costs.
Jan 7th 2012, 7:04 am
#206
Lost in BE Cyberspace
Joined: Dec 2010
Posts: 14,040
Re: LAFHA under threat
Come off it. ! Swan more or less said as much when he announced the changes.
Will they be so quick to remove the 'tax' grabs that are imposed on 457's, particularly the school charges? I think we both know the answer to that.
It would be nice to think somebody would challenge the legality of those charges, particularly primary school costs.
Will they be so quick to remove the 'tax' grabs that are imposed on 457's, particularly the school charges? I think we both know the answer to that.
It would be nice to think somebody would challenge the legality of those charges, particularly primary school costs.
Jan 7th 2012, 9:27 am
#207
Social Grenade Thrower
Joined: Jan 2008
Location: South Coast, NSW
Posts: 3,625
Re: LAFHA under threat
Make up what difference? 
I don't know what benefits you assume all PR and citizens are getting that 457 holders are missing out on. However even if there were some, employers don't have to offer LAFHA to make up the difference. If there is some benefit that everyone else is apparently receiving except 457 visa holders, then again, the employer should be bridging the gap. And if that makes the 457 visa holder a less attractive option, then that is good, because companies should be placing local candidates first.
I don't know what benefits you assume all PR and citizens are getting that 457 holders are missing out on. However even if there were some, employers don't have to offer LAFHA to make up the difference. If there is some benefit that everyone else is apparently receiving except 457 visa holders, then again, the employer should be bridging the gap. And if that makes the 457 visa holder a less attractive option, then that is good, because companies should be placing local candidates first.
I was trying to put across the company's perspective, i.e. as they already offer a comparable salary why would THEY have to offer a higher salary to me/any other current 457 holder with LAFHA. I was actually being objective and seeing it from the company's viewpoint in relation to the renegotiation aspect, which if I am honest does not have much leeway.
Jan 7th 2012, 9:29 am
#208
Social Grenade Thrower
Joined: Jan 2008
Location: South Coast, NSW
Posts: 3,625
Re: LAFHA under threat
Let's look at what a 457 is in the first place. It's a visa designed to fill areas where local skills don't exist. It's not designed to give foreign citizens an avenue into Oz. If this is your desire perhaps you should jump on a skilled migrant visa. I will agree that this change will affect the personal situation of many 457 holders, but it needs to happen for the rest of taxpayers
Jan 7th 2012, 10:12 am
#209
BE Forum Addict
Joined: Oct 2011
Posts: 1,217
Re: LAFHA under threat
Not that im after LAFHA. But in my situation where I will be moving over ahead of family for 6 months or so, I have to pay for my accomodation and living in Aus plus pay for the house and living for the family back home aswell, in that case the extra cash for a bit would be handy. But im not after it so it doesnt matter! 
Jan 8th 2012, 10:54 pm
#210
LAFHA Professional
Joined: Apr 2011
Location: Canberra, Australia
Posts: 32
Re: LAFHA under threat
Just reading the few lines you have posted. If you are already a permanent resident of Australia, then following the route your company sends employees to Australia, you would not appear to be eligible for LAFHA under the current guidelines, nor the future guidelines as we know them. This is because of the fact that you are PR, and the only two conditions that must be met to obtain LAFHA under the current guidelines are:
- The But for Test. But for having the new temporary job in Australia, you would have remained living at your permanent place of abode, in you case this would need to be India (You won't pass this because your are PR and therefore your place of abode is a location where you live now permanently in Australia).
- Intent to Return Home. You must have intent to return home at the end of the temporary contract. (You can’t pass this, because as a PR your home is in Australia).
Just for the record. If you are a foreign citizen, it is what we call a “Furphy” in Australian slang (ie a falsity), to be of the opinion that you must under the current legislation, owned or have rented a property in your home location. It is one of the many considerations, but not one of the two key conditions that must be met. And in your case is null and void because you are a PR. Anyone coming from a foreign country would have had a place of abode, ie somewhere to sleep at night, and this meets the need for originally having accommodation at home and is why it is not one of the two key considerations.
If you are being paid LAFHA as a PR in the manner you describe it, then your employer is at fault and an ATO audit will require you to repay all that you have been paid, and will also require your employer to pay Fringe Benefits Tax at 46.5 cents in the dollar for every dollar they paid you.
Unfortunately you simply are not eligible for LAFHA if your situation is as you describe it, and you simply need to negotiate your contract to the limit that you need to live in Australia.
Anyone with an Australian PR, can and should expect to be able to ask their employer for LAFHA, now and post 30 June.
At the high level there is no change to the eligibility criteria:
- You need to have a place of abode in Australia,
- Then your employer, or a new employer, must require you to move to temporarily to a new location, and you must have the intent to return to the original place of abode in Australia.
This is current now, and anyone in this predicament can ask for LAFHA, and should their employer agree to pay it, then it would be paid.
The significant change after 30 June is that it appears that it won’t be enough to just move from your place of abode and rent in the new temporary location, instead you will have to still maintain the original property in your home location in Australia. This means that you will not be permitted to sublet it. You will need to maintain two properties.
Regards,
Ian