Alienfeet

It means incusive of Super. So take 9% off the $85k.

What do you think this means then "It is the market salary rate for the nominated occupation, not the nominated worker’s proposed salary"?

thanks for the very useful excel sheet. Bit confusing. What do you recckon my take home pay will be with LAFHA?

nurseval

I got the link; opened it up and I am now.. blonder than when I first started..

I havnt had a job offer or pay offer at present as waiting for documents to be verified etc..

But is there a way where you can explain this to me etc.. what is novated lease?
If I dont get LAFHA I dont get taxed.. I am sorry but it is all confusing for me.. want to do the research before I get a job offer..

paddyo

Novated Lease is a car, I put it in there as that was an option that I had. Its another tax offset which you can use. I think as Hospital people you actually can get better tax offsets.
You will ALWAYS get taxed, all LAFHA does is enable you to reduce your taxable amount. If it is too confusing for you, ignore the LAFHA and just base your figures on your expected salary package.

The purpose of LAFHA is to enable Temporary residents to claim their food and accomodation expenses as a non taxable amount thus actually increasing their Net take home pay. The rationale is that you are intendign to return to your Permanent place of residence and may have your own mortgage/rent etc to fulfill at your Permanent place of residence. The Food element is a set figure set by the ATO and is according to the number of adults and dependant children in the household. The Accomodation figure is a 'reasonable' amount agreed between you and your company, a good generic figure to use is $500pw. However, if you are on a 457 Temp Visa you can NOT have your taxable salary go below the MSL so it may mean that you have to reduce your LAFHA to remain above that amount.

paddyo

adjust your lafha amounts so that your taxable salary is at or above 47k, then your take home net salary will be shown.

Alienfeet

paddyo, totally value your opinion as you seem to confidently know what you are talking about but how do you explain the two points:

1. The LAFHA website asks "Is your expected gross income excluding superannuation greater than $45,000 per annum?"

2. IMMI say "It is the market salary rate for the nominated occupation, not the nominated worker’s proposed salary"

If what you are saying is correct I have adjusted my figures to this:

Food allowance $13,000 (250*52)
Accommodation $19,500 (375*52)
Super $7,018
Base Salary $ 47,775
Total value of package $87,500

I've reduced Food and Rent and I've had to increase the total package value to $87500. I'm not sure the employer will go for an increase in the package though as it has already been increased.

Does the employer pay the LAFHA portion of the package? If I reduced the LAFHA is this an incentive for them to increase the Base Salary level?

thanks mate.

paddyo

In red

paddyo

The key thing, is look at the spreadsheet I sent, then look at the 'with' and 'without' LAFHA Net figures.....now you will see why it helps so any LAFHA you get is a bonus.

Ian Lindgren

Hi All,

I can see that there is a lot of uncertainty about LAFHA and I’d like to take the opportunity to clarify the uncertain issues for you.

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.

LAFHA is the most misunderstood and underulitised allowance in Australia for three reasons. The first reason is that there is no one repository of current knowledge on the ATO web site, and to make matters worse the immigration web site contradicts itself in 13 places.

The second reason is that LAFHA has the word "Allowance in it". This means to most people, that they have to pay you more! When in fact your taxable salary is reduced by the LAFHA amount you claim, so there is no more for your employer to pay. They pay less tax on you, and you get in the hand what they do not pay.

The other reason is that LAFHA is administered under the Fringe Benefits Tax (FBT) Act, and because people (including accountants, CFOs and payroll officers do not know all there is to know about LAFHA), they automatically take a defensive stance and say "No to LAFHA" because they think it attracts FBT. It does not as long as it is paid correctly.

LAFHA is not an entitlement; it is only paid if your employer agrees to pay it. If you were eligible for LAFHA, and your rental was $650/wk, then you would receive a reduction in your taxable income by $650/wk and if you had a partner and two children and additional reduction in salary for the food component of $293/week. These figures combine to give you $943 per week LAFHA which is $49,036 per year. So if your annual taxable salary was $100,000 it would fall by $49,036 making your new taxable salary $50,964. So you would receive an increase in cash in hand of about $18,000 per year.

LAFHA can continue for the whole 4 years you are on a 457 visa, so long as you intend to return home. The moment you decided not to return home and apply for PR, LAFHA must stop.

Minimum Salary levels now have no impact on LAFHA, meaning LAFHA is considered now as “salary” for the MSL. The immigration web site is currently incorrect because it does not show the latest legislation. Therefore maximum confusion because 13 different pages tell you 13 different things.

The big things that you must remember about LAFHA are that:
• Each case must be considered on its own merits
• You must intend to return home
• Your accommodation costs must be “reasonable”, ie not a penthouse unless you are on $300,000 per year and a senior employee, but also not a hovel!
• Your meals costs are fixed by the ATO each year on 1 April.
• Never let anyone tell you to claim anything that is blatantly illegal or double dipping; You've got to ask yourself, hand on heart, if I was questioned by the ATO, could I win because I was truthful?
• Never let anyone contact your employer about providing you with LAFHA. That will get your employer off side (as you have already mentioned), so always control the communications yourself.
• LAFHA is usually worth about $15000/year to you additional cash in hand for accommodation and food components. It does not cost your employer any more money, and does not attract Fringe Benefits Tax is paid correctly.
• You can also claim things like:
o Removal and insurance of household effects to Australia and back home
o Temporary accommodation at home before you leave, and in Australia, and the same on the way home
o Storage of furniture at home
o Telephone, gas and electricity connection
o Leasing of household goods
o Return flights back home during your temporary stay in Australia

Never be afraid to seek assistance from PayMe to identify exactly what you will be paid. Once you understand how we can help you, and what we can provide your employer with so they “know they can legally pay you LAFHA at no additional cost and with no FBT, then you are usually on your way to being paid LAFHA correctly. We can assist so “you don’t upset the applecart”.

Sure we have some minor one off fees, but you will get these back in your first week or so of LAFHA payments. I hope I have helped in some way. By the way, next week we will have a LAFHA calculator on our web site.

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

Alienfeet

Thank you so much Ian. Your input has resolved my issues that I've been having ever since I received a job offer 8 days ago.

thanks very much

Alienfeet

FAO: paddyo

Why increase your package figure? If they have already stated it is to be 85k then stick with that. By all means try and negotiate soem more though!!

I only increased the package because after reducing LAFHA my NET take home was lower than I wanted.

ldticp

I have been informed by my work that I can only claim LAFHA for my salary above $57k, from prvious poster this seems to be incorrect.

Is it easy to get the LAFHA changed later on or should i try to insist this is changed before I head to Australia/apply for visa?

JAJ

Concerning the issues raised at: http://britishexpats.com/wiki/Corpor...tion-Australia you need to understand that:

- you are vulnerable if you do not have permanent status
- you can ask your employer to give you some financial/contractual protection
- if employer says no, you are free to refuse to accept the job

paddyo

LAFHA can be changed anytime. I have changed mine 3 times, each time I have moved and gotten different rental amounts.

paddyo

Minimum Salary levels now have no impact on LAFHA, meaning LAFHA is considered now as “salary” for the MSL. The immigration web site is currently incorrect because it does not show the latest legislation. Therefore maximum confusion because 13 different pages tell you 13 different things.
Where is this stated? I would like that reference to use.

Also, to clarify, LAFHA has no 'term'. 4 years is the normal 457 term but LAFHA can be ongoing as long as your intention is to return to your Permanent residence. For example, I had an inital 3 yr 457, now that has been extended by another 4 years and I can continue to claim LAFHA.

Ian Lindgren

Hi ldticp,

The advice you have received from your employer that indicates that you can only claim LAFHA when your salary is above $57k seems to be at first glance an accidental misinterpretation of LAFHA by your employer. I say this without any knowledge of your position, however:

• for non-visa holders, salary is not, and has never been a limiting factor in being eligible for LAFHA or paying LAFHA, and

• for visa holders, up until 1 July 2009, the calculations that went towards defining one's Minimum Salary Level, or Temporary Skilled Migration Income Threshold (TSMIT) as it is now known, required that LAFHA not be included. However this is no longer the case, LAFHA can be considered an element of calculating the TSMIT. This is not indicated on the immigration web site to the best of my knowledge but can be found at Page 9 of http://www.payroll.com.au/briefingsn...esentation.pdf. I took the time to confirm that it is still not shown on the Immigration website at 3:15 today and after talking to Manny at the Melbourne employer’s hotline Manny confirmed that so long as the LAFHA payment was a regular and continued payment, it does contribute to the TSMIT and confirm that the change was made in legislation that is not publically available. Any employer can get the same advice from the same source on 1800 040 070.

Rather than “getting LAFHA changed”, I would recommend that you identify with certainty what your LAFHA eligibility is, and what can be legally paid, should your employer be happy to pay if. Then you can take that to your employer in a way that “here is my issue, and here is the solution to that issue.’ That would be less likely to cause disruption with your employer. By the way the TSMIT went up today on 1 July 2011 to $49,330.

If you use a company such as ours to assist you, you would get these expenses back in your first week or so of LAFHA so it is a good investment, and you can tax deduct them in your next tax return, so again you receive a bit less than half of the cost back at the end of the tax year.

Something to think about in any case so you have certainty.

Regards,

Ian Lindgren
CEO PayMe Australia