kln

Hi,

I am currently in Australia on a Working Holiday Visa (417).

An employer has offered me a permanent position using a 457 Long Term Stay visa (4yrs).

Base salary is AUS $70,000 plus Super (9%).
Total 76300.

In the offer they have given me there is a note on LAFHA and how I would qualify for "tax exempt" components which are Food and Rental amounting to $15000 ($1250 per month).

Now considering all of the above I have a few questions.

1. Does this mean that my Salary is ACTUALLY made up of:

BASE Salary 65000
LAFHA 15000

Total 75000.

And would my employer be claiming 15000 from the Government on my behalf ?

If they were claiming this allowance should my total salary be in effect $85000 ?

2. Would I be entitled to LAFHA as someone already here on a 417 and then converted to a 457 ?

ANY thoughts on this are much appreciated.

Thanks.
KLN.

Nicky & Dave

Can't help on this one I'm afraid, KLN - as no-one has responded on this as yet, you may be better to repost this question on the Oz Immigration forum rather than here on the Lifestyle, as there are a couple of migration experts there who may be able to help.

Nicky

Sass73

Hi,
I think they are talking about salary packaging - it is the most awesome thing I know. Got it at my first job here and it took a while for it to sink in exactly what it is.
If you have a rental contract, you basically get that amount tax free back into your account each month and this is as well as your initial tax free allowance. It also means, as it is taken out of your monthly wages (or fortnightly) before you are taxed, your tax is less as well.
It all means that your take home pay is a lot more than if you don't do it and it can be a difference of about $200 - $400 a month.
If you get the chance, do it. Some companies have a variation on this and where I am currently allows you to package payments on the car as well. You can also package your credit card bills!
Unfortunately, not everywhere does this.

Sass

Sandra

You need to talk to the actual payroll department and get full details of how that specific company will make the payment.

A few companies I know would reduce your base salary from 70, not including super to 55K and then tax this amount per month then you would receive an tax free allowance though your pay of $1250 per month. The Super deduction would be made on a notional sum of 70K. I repeat this is only one way of doing things. This means in effect you get the same pay as 70K plus super but do not have to bear the tax against $15K which for this tax year would be a saving of between 30-42% of this amount. I believe next year you should see a total saving of only 30% - still 5K in your pocket is better than nothing.

There are other ways of handling LAFHA and one is through packaging - the thing to watch with packaging some items is that you can be reducing your basic earns to achieve lower tax but you may also be reducing the amount of super you pay which will make the saving seem more for the immediate monthly benefit of the money but long term is not usually a good idea. Also you need to find out the impact of FBT on the elements you may package, ie like cars. Good Accredited Financial Advice is my recommendation.

I do not believe you will have an issue moving from a work visa to a 457 and getting LAFHA it is a pretty standard procedure.

Well done on getting the 457 Offer

ABCDiamond

The way I see it is:

If you start with a Base salary of $70,000 plus compulsory Super (9%), and the incorporate the LAFHA figure of $15,000, the 2 scenarios would be:

A:
Taxable Salary $70,000, and an extra 9% of $70k to a super fund = $6,300
Cost to the Employer $76,300

B:
Taxable Salary $55,0000 and an extra 9% of $55k to a super fund = $4,950
Non Taxable allowance (LAFHA) $15,000
Cost to the Employer $74,950 + any (FBT) fringe benefit tax they may incur.

But, you need to clarify with the employer.

Pomster

When I first arrived on a temp visa, my company paid me base salary and gave me a tax free allowance called LAHA (living away from home allowance) on top.
To allow them to pay me this tax free (and for me to not iccur Fringe Benefits Tax) I had to sign an annual declaration to say if it were not for my job, I would be living somewhere else (UK for me).
Not sure of the technicalities, but there is another version where you can salary package your rent. All very complex but very beneficial!

kln

Thanks for your thoughts!

The information has been helpful.

Here is some information I have recently discovered that may help other people in similar situations:

http://www.ato.gov.au/print.asp?doc=...t/mr200283.htm
http://www.abc.net.au/worldtoday/stories/s725026.htm

The following link is a VERY interesting one in that "taxpayers" can claim compensation from the ATO ? Good Grief !!! Surely Not!!

(Go to Bottom Bot of Link - LAFHA)
http://www.taxpayer.com.au/newslette...20050616132001


Let us know what you think, especially in regards to the last link above.

And unfortunately I dont think we have any answers at all about the eligibility of a 417 holder converting to a 457 in Australia to LAFHA.

Thanks.

helpwithvisa

Have you considered an SIR,

the rules changed recently to allow WHV holders to apply on=shore after they have been here for a certain amount of time. there are conditions attached, but ti would lead to Pr and get you on the regular tax scheme. Although not a tax expert, I'm guessing your on an emergency tax code (for which you can submit a tax return at the end of the financial year).

My new website should eb up and running tomorrow. Whay not have a look.

Good luck and make sure you consider all the options.

Andy Sinclair-Ford
sf-migration-australia.co.uk