Salary in Sydney
Jul 6th 2010, 9:53 am
#16
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Posts: 123
Re: Salary in Sydney
Thanks for this helpful info. Could you send me the LAFHA calculator? Not sure if you need to PM me (new to this site) I have mentioned LAFHA to HR in Aus and they said it cant be offered and I thought this was because of a hit on them, but by the sounds of it its the admin side they are shying away from. Will defo look this up on the relevant websites mentioned. Again thanks for the helpful information
Jul 6th 2010, 10:44 am
#17
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Location: South Coast, NSW
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Re: Salary in Sydney
Thanks for this helpful info. Could you send me the LAFHA calculator? Not sure if you need to PM me (new to this site) I have mentioned LAFHA to HR in Aus and they said it cant be offered and I thought this was because of a hit on them, but by the sounds of it its the admin side they are shying away from. Will defo look this up on the relevant websites mentioned. Again thanks for the helpful information
Here is the calculator BTW.
Jul 6th 2010, 10:59 am
#18
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Re: Salary in Sydney
Good to hear that. I will make sure HR dont try pull the wool over my eyes. Thanks you very much for the very useful info and LAFHA calculator. 
Jul 6th 2010, 11:10 am
#19
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Re: Salary in Sydney
Jul 6th 2010, 11:28 am
#20
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Re: Salary in Sydney
On the other hand if you can get LAFHA its a no-brainer. Salary packaging companies can do all this for you (for a fee), but again your employer has to be willing to deal with them.
Jul 6th 2010, 1:47 pm
#21
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Re: Salary in Sydney
16. LAFHA – recipients allowance period (NIA)
The definition of ‘exempt accommodation component’ in section 136 of the FBTAA requires the employee to provide the employer with a declaration before the declaration date stating the employee’s usual place of residence and their actual place of residence during the recipients allowance period. The ‘recipients allowance period’ is defined in section 136 as 'the period to which the recipients allowance relates’.
The question is, in situations where the allowance is paid for periods or parts of periods that occur before the FBT year in which the allowance is paid, can the employee include these prior year periods as part of the ‘recipients allowance period’ in the declaration?
For example, if an employee is required to live away from their usual place of residence in order to perform the duties of their employment during the period from 1 February 2008 until 30 August 2008. The employer pays the allowance to compensate for the additional costs of accommodation for this period but the payments are not made until after 31 March 2008 that is, the payments partially relate to the 2007–08 FBT year but are not paid until the 2008–09 FBT year. It appears that the living away from home allowance needs to be dealt with in the 2008–09 FBT return but the employee’s declaration for the 2008–09 FBT year should state the recipients allowance period as including the period in the 2007–08 year that is, from 1 February 2008 to 30 August 2008 and assuming the allowance otherwise qualifies as exempt accommodation component it will be exempt from FBT.
Does the Tax Office agree with this analysis?
As an extension to the above question, does it make any difference when the employer agreed to pay the allowance. Extending the above example if the employee agreed to living away from home in order to perform the duties of their employment from 1 February 2008 but the employer did not decide to pay the living-away-from-home allowance until say 1 July 2008, but back paid it to cover the employee’s additional accommodation cost since 1 February 2008. It appears that it should not make any difference when the decision to pay the allowance is made provided it is paid to cover the additional costs of accommodation while the employee is required to live away from home to perform their employment duties.
Does the Tax Office agree with this analysis?
Tax Office response
The Tax Office agreed with the analysis put forward in the NIA submission.
Broadly section 30 refers to an allowance being paid at a 'particular time, in respect of the employment of an employee of an employer'.
The benefit that section 30 refers to is the payment of the allowance. An agreement to pay an allowance is not the benefit and does not impact on the provision of the benefit.
In determining to what extent a living-away-from-home allowance fringe benefit will be exempt from FBT, section 31 refers to the reductions available for the exempt accommodation and exempt food components of the 'recipients allowance'.
The 'exempt accommodation component' and 'exempt food component' definitions in sub-section 136(1) require a declaration in an approved form before any reduction is possible. Both of these definitions also refer to the 'recipients allowance period'. This is in turn defined in sub-section 136(1) as being 'in relation to a living-away-from-home allowance fringe benefit, means the period to which the recipients allowance relates'.
Given the requirements set out in the relevant provisions and related definitions, the Tax Office also agreed that where a living-away-from-home allowance is paid that covers a period spanning two different FBT years, the living-away-from-home declaration will cover such situations and an employee would complete the declaration (in the approved form) stating the periods that the employee was in fact required to live-away-from-home. This would set out the 'recipients allowance period', being the period to which the allowance paid during the FBT year related (even if that period included part of a previous FBT year).
http://www.ato.gov.au/taxprofessiona...tm&page=18&H18
The definition of ‘exempt accommodation component’ in section 136 of the FBTAA requires the employee to provide the employer with a declaration before the declaration date stating the employee’s usual place of residence and their actual place of residence during the recipients allowance period. The ‘recipients allowance period’ is defined in section 136 as 'the period to which the recipients allowance relates’.
The question is, in situations where the allowance is paid for periods or parts of periods that occur before the FBT year in which the allowance is paid, can the employee include these prior year periods as part of the ‘recipients allowance period’ in the declaration?
For example, if an employee is required to live away from their usual place of residence in order to perform the duties of their employment during the period from 1 February 2008 until 30 August 2008. The employer pays the allowance to compensate for the additional costs of accommodation for this period but the payments are not made until after 31 March 2008 that is, the payments partially relate to the 2007–08 FBT year but are not paid until the 2008–09 FBT year. It appears that the living away from home allowance needs to be dealt with in the 2008–09 FBT return but the employee’s declaration for the 2008–09 FBT year should state the recipients allowance period as including the period in the 2007–08 year that is, from 1 February 2008 to 30 August 2008 and assuming the allowance otherwise qualifies as exempt accommodation component it will be exempt from FBT.
Does the Tax Office agree with this analysis?
As an extension to the above question, does it make any difference when the employer agreed to pay the allowance. Extending the above example if the employee agreed to living away from home in order to perform the duties of their employment from 1 February 2008 but the employer did not decide to pay the living-away-from-home allowance until say 1 July 2008, but back paid it to cover the employee’s additional accommodation cost since 1 February 2008. It appears that it should not make any difference when the decision to pay the allowance is made provided it is paid to cover the additional costs of accommodation while the employee is required to live away from home to perform their employment duties.
Does the Tax Office agree with this analysis?
Tax Office response
The Tax Office agreed with the analysis put forward in the NIA submission.
Broadly section 30 refers to an allowance being paid at a 'particular time, in respect of the employment of an employee of an employer'.
The benefit that section 30 refers to is the payment of the allowance. An agreement to pay an allowance is not the benefit and does not impact on the provision of the benefit.
In determining to what extent a living-away-from-home allowance fringe benefit will be exempt from FBT, section 31 refers to the reductions available for the exempt accommodation and exempt food components of the 'recipients allowance'.
The 'exempt accommodation component' and 'exempt food component' definitions in sub-section 136(1) require a declaration in an approved form before any reduction is possible. Both of these definitions also refer to the 'recipients allowance period'. This is in turn defined in sub-section 136(1) as being 'in relation to a living-away-from-home allowance fringe benefit, means the period to which the recipients allowance relates'.
Given the requirements set out in the relevant provisions and related definitions, the Tax Office also agreed that where a living-away-from-home allowance is paid that covers a period spanning two different FBT years, the living-away-from-home declaration will cover such situations and an employee would complete the declaration (in the approved form) stating the periods that the employee was in fact required to live-away-from-home. This would set out the 'recipients allowance period', being the period to which the allowance paid during the FBT year related (even if that period included part of a previous FBT year).
http://www.ato.gov.au/taxprofessiona...tm&page=18&H18
Jul 6th 2010, 10:01 pm
#22
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Joined: Jan 2008
Posts: 22
Re: Salary in Sydney
I have been trying to get my head around this LAFHA topic and I understand its up to your company agreeing to it. Does that mean they pay it and then they some how recoup the cost from the ATO? I ask this as my company are saying that this is a financial benefit that's not part of my financial assistance deal. 
Thanks in advance
Thanks in advance
Jul 6th 2010, 10:21 pm
#23
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Location: South Coast, NSW
Posts: 3,625
Re: Salary in Sydney
FBT is an element but even I can understand it, and belive me if I can understand tax then anyone can!!!
Whether they want to be involved should be irrelevent, it is a small piece of admin to be able to provide greater incentive to potential employees on the 457 Visa.
Jul 6th 2010, 10:26 pm
#24
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Location: South Coast, NSW
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Re: Salary in Sydney
I have been trying to get my head around this LAFHA topic and I understand its up to your company agreeing to it. Does that mean they pay it and then they some how recoup the cost from the ATO? I ask this as my company are saying that this is a financial benefit that's not part of my financial assistance deal.
Thanks in advance
Thanks in advance
There is no financial benefit to your employer, unless they have their head screwed on properly and actually offer you less salary but provide Lafha to give you greater take home (net) pay.
It really is not difficult and I would advise any 457 Visa holder to really go for it with their employee and if they do not provide it find out the root cause why, I bet that 90% of the cause is lack of knowledge or work effort on behalf of the pay team!!
Jul 6th 2010, 10:32 pm
#25
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Joined: Jan 2008
Posts: 22
Re: Salary in Sydney
Cheers Paddyo for your response. I need all the ammunition and information I can get. Top man
Jul 7th 2010, 12:29 am
#26
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Joined: Sep 2001
Location: Sydney
Posts: 3,014
Re: Salary in Sydney
Some companies offer LAFHA and are also very experienced in its application. It does not automatically apply and if the employee is intending to stay in the country and has made an application for PR then LAFHA does not apply even if still on a 457. It is supposed to be a temporary benefit for those truely coming to the country for short term work periods of less than 4 years.
I agree some smaller companies find difficulty with its application and the best way I have found to offset this is to put together a decent email with all the links to the ATO websites and give examples of the applicable calculations. Payroll departments in smaller companies may not have the (easy) set up to make these payments and therefore shy away from the changes they may need. Remember the company is responsible for the administration and therefore they have to check if the employee is really entitled to the tax free benefit and apply the relevant limits. To this end they have to check the intentions of the employee possibly every six months asking if circumstances have changed for the employee and getting signed declarations. The law in this area is not that straight forward on responsibility and there have been changes over the past years. In my opinion at this point LAFHA is not a employees right and should be requested not demanded. It would be a heck of a lot easier if the ATO put down some easier boundaries and clarifications.
I agree some smaller companies find difficulty with its application and the best way I have found to offset this is to put together a decent email with all the links to the ATO websites and give examples of the applicable calculations. Payroll departments in smaller companies may not have the (easy) set up to make these payments and therefore shy away from the changes they may need. Remember the company is responsible for the administration and therefore they have to check if the employee is really entitled to the tax free benefit and apply the relevant limits. To this end they have to check the intentions of the employee possibly every six months asking if circumstances have changed for the employee and getting signed declarations. The law in this area is not that straight forward on responsibility and there have been changes over the past years. In my opinion at this point LAFHA is not a employees right and should be requested not demanded. It would be a heck of a lot easier if the ATO put down some easier boundaries and clarifications.
Jul 7th 2010, 12:36 am
#27
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Location: South Coast, NSW
Posts: 3,625
Re: Salary in Sydney
Some companies offer LAFHA and are also very experienced in its application. It does not automatically apply and if the employee is intending to stay in the country and has made an application for PR then LAFHA does not apply even if still on a 457. It is supposed to be a temporary benefit for those truely coming to the country for short term work periods of less than 4 years.
I agree some smaller companies find difficulty with its application and the best way I have found to offset this is to put together a decent email with all the links to the ATO websites and give examples of the applicable calculations. Payroll departments in smaller companies may not have the (easy) set up to make these payments and therefore shy away from the changes they may need. Remember the company is responsible for the administration and therefore they have to check if the employee is really entitled to the tax free benefit and apply the relevant limits. To this end they have to check the intentions of the employee possibly every six months asking if circumstances have changed for the employee and getting signed declarations. The law in this area is not that straight forward on responsibility and there have been changes over the past years. In my opinion at this point LAFHA is not a employees right and should be requested not demanded. It would be a heck of a lot easier if the ATO put down some easier boundaries and clarifications.
I agree some smaller companies find difficulty with its application and the best way I have found to offset this is to put together a decent email with all the links to the ATO websites and give examples of the applicable calculations. Payroll departments in smaller companies may not have the (easy) set up to make these payments and therefore shy away from the changes they may need. Remember the company is responsible for the administration and therefore they have to check if the employee is really entitled to the tax free benefit and apply the relevant limits. To this end they have to check the intentions of the employee possibly every six months asking if circumstances have changed for the employee and getting signed declarations. The law in this area is not that straight forward on responsibility and there have been changes over the past years. In my opinion at this point LAFHA is not a employees right and should be requested not demanded. It would be a heck of a lot easier if the ATO put down some easier boundaries and clarifications.
Its easy, not difficult and the boundaries from ATO are quite clear enough.
Jul 7th 2010, 12:40 am
#28
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Joined: Jan 2008
Location: South Coast, NSW
Posts: 3,625
Re: Salary in Sydney
You are right of course, it is not a right, but it bloody well should be for all those eligible.
Jul 7th 2010, 12:42 am
#29
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Location: South Coast, NSW
Posts: 3,625
Re: Salary in Sydney
Some companies offer LAFHA and are also very experienced in its application. It does not automatically apply and if the employee is intending to stay in the country and has made an application for PR then LAFHA does not apply even if still on a 457. It is supposed to be a temporary benefit for those truely coming to the country for short term work periods of less than 4 years.
It is Living Away from Home Allowance, not New People Coming to Australia Temporarily Allowance.
Its a common misconception.
Jul 7th 2010, 1:43 am
#30
Gone Senile Member
Joined: Sep 2001
Location: Sydney
Posts: 3,014
Re: Salary in Sydney
Nope!!!! You can also get Lafha if a PR or citizen and working away from your residence Intra State!!! You could be Sydney based and having to work in Victoria for example and move your family there temportarily leaving your permnanet residence in Sydney and be entitlked to Lafha.
It is Living Away from Home Allowance, not New People Coming to Australia Temporarily Allowance.
Its a common misconception.
It is Living Away from Home Allowance, not New People Coming to Australia Temporarily Allowance.
Its a common misconception.
) when working away - but in the context of this email I was saying the application of LAFHA for 457 was a benefit but did not say it was exclusively for them