• YES - employees performing duties away from their residence,
• NO - working holiday visa holders.

Lorne,

I read with interest your article dated 10 July 2003 regarding the Living Away From Home Allowance. Without wanting to debate the relative merits of the tax advice you have provided, I thought it would be useful to point out a number of technical inaccuracies in your article.

To state that employees on a Working Holiday Visa are not eligible to receive a LAFHA is incorrect. As you correctly point out, the ATO released TD 2000 / D5 which argued that Working Holiday Makers were not eligible to receive a LAFHA. However, it is important to note that as stated in the preamble to the draft determination, a draft ruling is only the ATO’s preliminary view and should not be relied upon by taxpayers. Further, contrary to your article, an ATO determination is not legislation, but only the ATO’s view on the application of the legislation.

The ATO has now proposed an alternative draft determination to replace TD 2000 / D5, which removes the reference to visa status, and seeks to apply the LAFHA based on individual circumstances.

Further you state that “the legislation clearly states that these allowances should be treated as income and are subject to PAYG taxation” – once again this is only the view expressed in TD 2000 / D5 and should not be construed as legislation. Nonetheless I agree with your comment that this is the manner in which the ATO will seek to recover funds from employees where it considers that a LAFHA has been paid incorrectly.

The clear message is that under current legislation (and not preliminary ATO views) Working Holiday Makers are able to receive a LAFHA, depending on their personal circumstances. Therefore contractors should ensure that any salary packaging, including the provision of a LAFHA benefit, is undertaken on a prospective basis by reputable advisers.

Yours sincerely

Matthew Roach

FreeSpirit International

1300 65 85 65

I was contracted to come and work in this country for a fixed period of time from June 2000 to January 2002.

My principle place of residence was the UK and I have only just been informed of the LAFHA. Please can you advise me on how I might be able to back-claim for this period.

Many thanks

Katy Theakston

Where the word "principle" appears in your article, it should be "principal".

Is the LAFHA a fix duration of time? I am applying from residency and understands LAHFA no longer is available which makes sense becasue work want to sponsir my residency to keep me in Australia and continue to work for them.

I understood LAFHA is available for 4 years only?

Is there any specific period for which the LAFHA elegibilty can be claimde by an individual.

Is this LAFHA benefit dependent of Visa for people coming into Australia. (eg:4 years for people coming on 4-5-7 Visa)

Are the PR holders elegibel for LAFHA.

kindly respond and also request togive some refernce to ATO ruling supporting these.

Thanks

Hi,

I am looking at accepting a position in rural NSW as there is no work here in Sydney for me. Am I able to claim the LAFHA as I own my own home in Sydney and will have to pay rent in Tamworth. If I am eligible for this allowance how do I go about claiming it?

hi i just have a few questions about this allowance. i am 15 this year and im currently living at kowanyama. the education system here isnt that good so im trying to transfer back to gordonvale state high school. and if i do i'll be living with a friend of mine. does this make me elligable to get the living away from home allowance?? please email me back asap thnk you very much

loraine healey

Hi

It was excellent to know LAFHA, can I know what process I should take so that I can claim my food and accommodation expenses?

Appreciated your help.

Kind regards

Linda

hi,

i am reapeating grade 12 in 2008 and was wondering if i am eligiable for the payment as i am repeating at a boarding school. also how much would the payment be?

From what I have read from the ATO, and of the legislation, I fail to see how the LAFHA could possibly apply to those on a working holiday visa.

The representative from Free Spirit correctly points out that the advice issued by the ATO was purely their 'take' on what the legislation means, however, he failed to demonstrate precisely why this take could be considered incorrect.

Let's look at the purpose of the legislation.

The idea behind LAFHA is that it is for those persons who have to live away from their usual residence temporarily as part of an on going contract of employment. The Allowance is designed to assist these persons with the added expense of running two homes during this period. This would seem to preclude those who have travelled to Australia from another country on a working holiday (by choice), who were not previously employed in Australia, and are not, for the purposes of Australian taxation, "living away from home" - as they are most probably Australian residents for tax purposes, they are therefore living at home - i.e. in their only Australian residence.

The article is correct in asserting that the individual would be liable to pay back any Allowance which has been paid to them in error.

However, that is just my "take" on the legislation: it is designed with those in mind who have entirely different circumstances than one on a working holiday visa (unless, of course, that person gets a job which requires them to live away from their usual Australian residence for a period of time).

I am currently working under a WHV, though am happy enough to accept a good sized tax (and superannuation) refund instead of making a spurious attempt at an Allowance for which, I believe, I have no eligability.

What's the process to claim this allowance? Can someone explain please?

Is it possible to back-claim the LAFHA. I didn't claim it last year.

Hi,

I'm very interested with your article, where I've never heard about LAFHA before.

I'm holding 457 visa in Australia, and I've been here for 2 years. Am I eligible to get LAFHA and how does it work? (where to apply, where to get a form and where to lodge it?)

I really appreciate if you can inform me.

Thank you.

Regards,

Ada Nasution

Hi There

I noted your very helpful comments and details on the Blog:

link

If possible Please would you help me:

I am a South African Chemical Engineer who will be beginning work in Perth from January on a 457 Visa basis.

I have been unable to get the correct accounting person to advise me on how best to implement the LAFHA as it would specifically apply to me.

I need to advise my Employer's accounts/financial team on how this needs to be actually implemented.

I am also being chased by the imigration consultant who is contracted by the company to process my 457 Visa application.

He requires me to furnish him with a clear breakdown of my remuneration package saying that it the Visa application must Correctly reflect the Base and Total salary stating:

'You indicated that you were looking at a living away from home allowance. If such and allowance is paid then it must be declared as part of the total package now and separated from the base salary.'

At this stage I do not know what the actual costs of rent etc will be on an annual basis, although an estimate would put it at about AUS$ 20,000 pa.

So For example:

If I was to be paid : AUS 100 000 excl Super annuation

Should this be regarded as the Total Package and

the Base Salary be reflected as: ~ AUS 80,000+ SuperAn ##? + AUS 20,000 LAFHA ?

What happens if the actual rental costs etc exceed this AUS 20,000; can these be claimed back as part of my tax return?

How is this managed?

Do you know of a good reputable Tax Consultant in the Perth area who would be able to help me with this?

I understand that you might not have TIME to answer this email, but would sincerely appreciate any advice you could give!

Kind Regards

Andrew Brown

andrew@cranswick.co.za

Ahhh, LAFHA, the most misunderstood legislatioin in Australia.

Anyone who is in Australia on a 417 visa or a 457 visa is eligable so long as they have a declared intention to return home.

It cannot be claimed, only administered by your employer at the point of payroll.

Please contact me for more information in needed.

Hi i am wonderng if i would be eligible for the LAFHA???

I moved over here to work with my degree and have now been over here for 18 months, i wonder if i would qualify for the LAFHA??

Please email me with information

Kind regards

We will have a person coming from UK and our organisation would like to know whether she is eligible for LAFHA or not. Can you please send me a list of questions which we can ask the lady from UK and we can determine whether she is eligible for LAFHA or not.

Thanks for your help.

Regards

Betty

Hi,

My name is Richard, 28 from France.

I lived in Paris during the last 5 years. I left my job and everything else in France to come and work for one year in Australia with a Working Holiday Visa. After 2 months in Sydney I've found a new job as an engineer in Perth.

My new company in Perth applied for a business visa for me and my girlfriend. I've just received these new 457 visas.

I've got a work contract with this company for at least 2 years.

I live in South Perth. My rent is about 1400$ fornightly.

Can you tell me if I can ask for the LAFHA ?

If yes, could you tell me how ?

Thanks for your help.

Hi, as everybody else, I am also asking for help regarding Lafha.

I am here with my partner on 457 visa (I am the dependant). If he is applying for LAFHA, can he ask the allowances for both of us, or just for himself? Are there any links at all which could give us the hint how to count the amount of allowances and where to apply it for?

Thank you. J.

Hi all

I'm currently in Oz on a 457 visa and successfully claiming lafha. Looking at moving to a bigger place and just wondering if there's a maximum weekly rent that can be applied for the accomodation allowance? e.g. $x p/w x 52 weeks / 12 months = the monthly allowance used to calculate reduced taxable income

Thanks in advance

Craig

I've been in australia since April 2005 on a 457 visa but have never claimed LAFHA. I'm now a permanent resident but was wondering if I can claim back the LAFHA when I was working on a 457 visa?

I am an Electrician that works on major projects all over Australia and either stay in employer supplied camps or collect LAFHA.

LAFHA collected from the employers ranges from $350-$375 which goes nowhere in industrial towns.

Can I claim the difference between what I collect and the amounts stated in the allowances section on the ATO website.

If so, how many years can I go back to claim tax amendments.

Any advice would be appreciated or the contact details of an Accountant with a clear understanding in this area.

Regards

Hi,

I have read so many information about the LAFHA and I understand what is it but I still don;t understand how it is impacted on the salary.

I need some help please!...

Let say, you have a gross income of 100K base salary and 9000$ of super /annual

you have 30000$ of Lafha on top of that

so now how do we calculate the net income???

is it:

gross income - super - lafha = new gross income

you calculate tax under the new gross income and then you deduce this tax amount of the base salary ?

and then do you add back the lafha to get the net or this it ???

I am lost so lost needs help please

Cheers

Al

Say u are earning $100,000 per annum. Without the LAFHA your are taxed accordingly on $100,000 - Now you get LAFHA - Your Rent is $20,000 per year. With LAFHA you are now only taxed on $80,000 per annum, that is a massive saving! I think this is how it works. Someone said to be though that if you are on a 457 visa you must get taxed on at least $57,000 so if you are on $57,000 it's doubtful that you will get LAHFA, how true this is I have no idea?? It sounds like the rich get the benefit and the middle class/poor get nothing.

I worked for a company called **************** [Ed: please don't put these types of accusations on here naming companies I don't want to get sued] and even though I was entitled for LAFHA benefit I was never told about it nor did I get it while I worked with them. It also seems they not only cheated me but other employees too who are entitled to it and not aware of it. Employers should be forced by law to provide this to oversees recruits. Why would a company do that when it is not an expense to them? Is this common in Australia? Maybe its just petty unprofessional companies like this one.

Does anybody know if taking out a mortgage (rather than paying rent) affects your ability to claim the LAFHA allowance?

I can't find the answer to this anywhere.

Cheers

Garrett

Hi alexa, I have the same question. I am on a 457 Visa and therefore my taxable income can not be below $41850. If I would be an IT specialist it is something around $52K.

I want to know how to calculate my super while getting LAFHA.

Let say I earn $100K gross salary. The threshold is $41850.

How do I calculate my super contribution. 9% based on my $100K or 9% on my $41850? Somebody told me I have to calculate 9% on the difference of ($100k - max LAFHA Benefit).

The formula to compute my max LAFHA benefit would look something like this:

Gross Salary-(Threshold/(1-9%)).

Can somebody help? Does anybody know the super regulations?

This stuff drives me crazy.

Thanks

Christian, Alexa,

The way it works for me (according to my payslip) is

SUPER = 9% of TAXABLE INCOME

with

TAXABLE INCOME = BASE SALARY - LAFHA

and of course

BASE SALARY = GROSS SALARY - SUPER

These formulas give:

BASE = (GROSS+0.09*LAFHA)/1.09

and the rest follows...

Example:

you have:

Gross = $100,000

Lafha (say 30%) = $30,000

You can calculate:

Base = $94,220

Taxable income = $64,220

then

Super = 9% of $64,220 = $5,780

Clear as mud ?...

I arrived late last month with my partner and am currently staying with family until we find work/accommodation of our own. The intention to is to live and work in Australia for a max. of a year.

Do we fall under a catagory of people eligible to apply for the LAFHA?

Hi,

I have just started working for a recruitment consultant in Sydney and I should have my 457 visa in around 3 weeks. How/Who pays my LAFHA and how much will I get?

I have a few friends who work for other recruitment agencies and they get two seperate payments each month, is that correct?

Thanks

Hi, I recently received a 457 visa until Apr 2012. Am i eligble for LAFHA? I am a teacher.

If so, can you give me a contact number so I can talk to someone about 'getting the ball rolling?'

Regards

Eimear

LAFHA is a ridiculous system that should be made redundant immediately.

I work in the Recruitment industry where 70% of the people I work with are from the U.K and benefiting from the ATO’s stupidity.

A colleague of mine just showed me that his LAFHA payments were bumped up to $43000 per year due to the cost of living and groceries going up in the area he lives!

Can some one please tell me what unique skills are needed to be a Telephone salesman?

While you’re at it please tell me what extra cost's do these people incur by living/working in Australia?

I pay the same bills, tax, rent, credit card interest rates as they do so tell me why is it that these people are getting a LARGE portion a year tax free.

I don’t want to hear that we have skill shortages and all the other tired old excuses as it doesn't justify LAFHA...these people are simply getting more paid extra to be in an amazing country when they all want to be here any way.

Some one please justify this stupidity when the taxes raised from these SKILLED?? migrants could be put towards bettering our hospitals and schools.

Hi,

I am a nurse that is moving to Australia from New Zeland in a months time to start a job in Sydney.

Am I eligible for the lafha?

If so, who do I contact? Is is Taxation office or centre link?

i have been in the UK for 2yrs and am being transferred to sydney to work.. i am originally from brisbane.. can i claim lafha?

Hi

I have included two adults in my LAFHA declaration form given by my employer but my employer has calculated the food component of LAFHA based on one adult. Its $191 pw for one adult and $306 pw for two adults.So I have been receiving incorrect LAFHA amount from April 2006 - present. I have just spoken to my employer and they have accepted the mistake

Will I be able to reimbursed the amount for that last two year from my employer

Please help me here

Can someone answer me,

I finished university and moved 600kms for work. I still rent my old place as well as my current unit when i'm at work. I usually travel home on weekends. My contract finishes at the end of the year and I intend to move into my old place. Can I claim LAFHA?

IVE JUST BEEN GRANTED A 457 VISA HER IN SYDNEY FOR 4 YEARS,I WOULD LIKE TO KNOW HOW TO GO ABOUT CLAIMING THIS ALLOWANCE OR WHAT I NEED TO TELL MY EMPLOYER?? IS IT BUILT INTO A CONTRACT OR HOW IS IT CO-ORDINATED??

THANKS VERY MUCH,

CAROL.

If i am required by my employer to work away from home for a period of time (say a number of years) and i buy another house at the location away from home... can i claim some sort of LAFHA or offset interest from the new home loan against my gross income? love Greedy

Hi

I have been working away from home for ten years.

My accommodation costs are now too expensive for me to work away from home. Therefore, I may have to resign from my job.

I dont want to be unemployed but looks like I will have to as I am unlikely to get a job due to my disability of deafness.

Do you think I might be allowed an allowance of some sort if I remain in the professional post that I am in. I really do not want to leave my job and live off the state.

I live in Englan UK

Best wishes

Deelaine

A LAFHA is an allowance that is paid at the discretion of the company you work for - so although you may on a 457 visa and living away from your home, you are not necessarily entitled to this allowance.

LAFHA works by reducing your overall taxable income because LAFH benefits are provided to the individual tax free (considered a fringe benefit, see Division 7, FBT Administration Act).

As well as food and accommodation, you can also receive flights home, conneciton of utilities and children's school fees as part of an effective salary sacrifice arrangement, potentially saving you thousands fo dollars while not costing the company any more.

My firm specilises in this area so call me for a free 10 minute consultation to see if we can help you or your business out.

Shannon

I have been told by my employer that I am not eligable for LAFHA as I chose to apply for a job in Australia and that job was based on a local contract. Is this correct?

Cheers

Sam

Hi Sam

Not necessarily. The ATO recently clarified that a person on a working holiday visa who applies for a job locally can still be considered LAFH - see NTLG FBT sub minutes, 8 May 2008 at Q2.

It is to be considered on a case by case basis but this will not automatically rule you out of LAFHA if your other facts and circumstanes support a LAFH position.

Cheers

Hi.

I am currently on a 457 visa, prior to this I was on a working holiday visa.

I understand that I may be entitled to claim the living away from home allowance. I have asked my employer about this, who is happy for me to investigate further.. I have checked out the ato.gov.au website and read through the information thereon. What are my next steps? Do I need to visit an accountant? How do I submit an application?

Tom

Hi Tom

First step is to confirm you are eligible for LAFH, i.e. intend to return home, only here for a limited period, not applying for perm residence, not buying a house here, etc.

If yes, then you need to 'carve out' the expenses which can be paid to you tax free - possibly food, accommodation, school fees, flights home, etc. and advise your employer of this. Payroll then removes this amount as 'taxable' and you receive it tax free through your payroll system.

I specialise in these services and am happy to chat for 10 mins regarding steps and work involved.

Cheers

hi

am on a 422 visa for 4 years.am receiving a lafha.if i buy a property to live in can i still claim a lafha???

thanks

debra

Hi Debra

Buying a property in Australia is a sign that you plan on living in Australia permanently and that this is your new home as opossed to you being classified as Living Away from Home.

Although not automatically ruling you out, unless there were extenuating circumstances to prove otherwise, buying a house should deem you not to be LAFH.

Cheers

Shannon

Hi Shannon.

Thanks for your advice so far. I'm here workling on a 457 and have asked about lahfa within my company. I was told that I cant claim it as I wasnt moved here specifically to do my job - I just happened to get the job after coming to Oz. Can you let me know if they are correct or are they just being lazy?

Hi,

I am currently applying for sponsorship and contacted the ATO to enquire whether I am eligible for LAFA and the person I spoke with said no. He said that because I was not head hunted and brought over here from Ireland that I am not eligible. I am reluctant to contact ATO in case I get similar advise. Who can I speak with directly? Any contact numbers would be appreciated. I told my place of employment I would feedback to them but I am still unsure whether I am eligible & as I am still on a working holiday visa until my sponsorship is approved what does that mean?

Any advice would be much appreciated!

Hi there

I am in a similar situation to Ian as I transferred onto my own 457 after being in Australia for a couple of years. Is there any way that LAFHA can be claimed back at the end of the year instead of being included in monthly pay? And if you can claim it at the end of the financial year, what do I need to provide or do?? Any info would be greatly received.

Many thanks

Jo

See attached link for a report (commissioned by the ATO) into LAFHA which explains what it is, its purpose and shortcomings. As far as I can tell there has been no legislative action on the recommendations to date.

http://www.igt.gov.au/content/reports/living_away_from_home/LAFHA-02.asp

In my opinion it is unlikely that any claim for LAFHA could be backdated as the ability for employers to make the deductions relies on a employee declaration which must be dated so that future payments can have LAFHA taken into account. I would be interested to hear from anyone who knows otherwise!

See also following link for principal tax ruling on LAFHA with examples and the prescibed declaration:

http://law.ato.gov.au/atolaw/view.htm?rank=find&criteria=AND~MT~basic~exact:::AND~2030~basic~exact&target=EG&style=html&sdocid=MTR/MT2030/NAT/ATO/00001&recStart=1&PiT=99991231235958&recnum=7&tot=14&pn=ALL:::E

I know the links above are heavy reading but this is not a simple area. If you still need help I suggest you contact Shannon (see previous posting above)

Hi Ian/Shell/Jo

Although the ATO may have unfortunately told you that you are not eligible, the person you called may not specifically deal with LAFHA so could have given you incorrect advice.

The NTLG FBT sub-committee meeting held in May this year, the ATO clarified that even if an employee did not leave their usual place

of residence for employment as they were already living away from their usual

place of residence, they may still be eligible for a LAFHA if there other facts and circumstances support this.

The minutes of this meeting specifically addressed that even a working holiday visa holder could be eligible for LAFHA if they accepted a position in Aus, so no, you do not need to specifically head hunted.

Ian - As this clarification is only recently released (May 2008) your employer may not have know about it as it is in direct contrast to an old ATO ruling (TD 2000/D5) which has since been withdrawn. Or yeah, they could simply be lazy!

Shell - LAFHA is a self assessment position unless you seek a private ruling from the ATO which costs $$$$$$. My firm can provide you with written advice which can help substantiate a LAFH position should the ATO ever question it if you require a detailed assessment.

Jo - LAFHA can not be claimed in your tax return or on a yearly basis. It is a prospective salary sacrifice amount and must be claimed through your payroll each pay.

Hope this helps. I am happy to talk with you if you want any further clarification or to see if my firm can add any value.

Cheers

Shannon

Okay so my situation is that I worked for 12 weeks for a recruitment agency who I claimed LAFHA through. This was all done with a lot of naivety on my behalf and now my problem is that I have to do my tax return and am worried I'll be hit with a tax bill that I won't be able to pay before I leave Oz.

Upon reading some of the above posts it seems that there's no actual legislation in place saying 417 holders can't claim it otherwise these organisations would be shut down by the ATO for working in an illegal manner.

Any help would be greatly appreciated

Thanks for the info, Shannon, much appreciated... at least I know rather than wondering!

Hi Jonnie

Any tax that is payable on a LAFHA (if the ATO deems that you are not eligible for LAFHA ) will be payable as Fringe Benefits Tax (FBT) by your employer. The employer may try and pass this cost on to you but unless you have signed something stating a payback clause, they can not make you pay this amount.

Being on a 417 visa does not automatically exempt you form LAFHA if your other facts and circumstances support a LAFHA position.

A LAFHA does not need to be reported in your tax return but rather is an exempt allowance with no reporting requirements.

Please call me for a free 10 minute chat to see if I can be of any help.

Cheers

Shannon

Many thanks for that Shannon,

The problem I had (I'm sure many other people have) I joined a recruitment agency who claimed that I'm eligible for LAFHA without looking into my details and out of disregard for what tax implications it may have had upon me. I've been paying the non resident rate of tax (29%) but having actually worked in the 1 job in Sydney for now approaching 6 months I do actually qualify as a resident for tax purposes and thus qualifying for a tax return. Anyways thank's again for your reply

There's a lot of useful info here, but I'm still confused!

I was on a working holiday visa, and my tax return shows tax due as 29% of my gross pay after taking out my LAFHA. However, my management company deducted less than 29% of my pay as tax, so my tax return is showing that I still owe some tax.

I've queried this with my old management company, who say that they can't offer me any advice except to say that LAFHA is a non-reportable tax benefit that I am under no obligation to report. This fits with what you say above, but nowhere on my tax return is there the option to exclude LAFHA. I've been using the e-tax online form, which is automatically populated with figures from my TFN account held on the ATOs database.

Any idea where I'm going wrong?

Many thanks,

Kellie

Hi Kellie

LAFHA should not have been included in your Gross figure in your payment summary - if it has been, you need to have your company issue you with a Payment Summary correction letter to remove these amounts.

Non-exempt allowances will be reported at Item 2 of your tax return but LAFHA should not be declared at all.

Generally if you are residing in Australia for 6 months or more (whether or not in the same tax year) you will become an Australian tax resident. Ensure that you are including this in your tax return and you will receive the tax free threshhold (for months of residency) and lower tax withholding rates.

Any questions please give me a call.

Cheers

Shannon

Hi Shannon,

I was recruited from the UK by large company on a 457 visa, they say that because I'm on a permanent contract I'm not eligible for LAFHA, it needs to show an end date.

They never mentioned LAFHA before I left for Oz and I meet all the other criteria (own house, still have bank accounts, intend to return etc.)

Am I eligible or is it really at the discretion of the company?

Am I in my rights to ask them to put an end date on as that's the only thing it seems to be hanging on?

Many thanks

Gemma

Hi Shannon

My employer stated that LAFHA is a benefit which they do not give. So even though I am on a 457 visa, I am still loosing on this benefit.

Is it absolutely at the employer's discretion? If lafha comes at no cost to the company, why do some extend this to the employee and some do not? Is there any way we can dispute this ridiculous policy?

Cheers

Prasad

Hi Gemma, Prasad

Yes, LAFHA is 100% completely at the discretion of the company. The reason is that LAFHA is a fringe benefit exempt from fringe benefits tax (FBT). If FBT is payable on the amount because the ATO deems you not to be LAFH, the company is the one who will have to pay the FBT on the allowance, i.e. they are then ones who have the risk!

Gemma, see if your company is willing to negotiate. we can provide a letter of advice confirming your LAFH position which could help sway the company's opinion - also providing a declaration absolving the company of liability. this is normally their main concern.

Prasad - unfortunately not much i can do. again, we cna provide you with advice and guarantees to help the ocmpany but unless they agree to it, there is nothing you can do.

Best of luck! please call me if you wish to chat about it further.

Cheers

Shannon

Hi Shannon and anybody else who can help me.

I was just reading all the threads here and Im trying to get my head around this. My daughter is currently in Australia on a working holiday visa. She has secured work and is in rented accommodation. Can she make some claim for rent allowance? Im at a loss here so im sending this from ireland. My email is susiemsmyth@gmail.com I would appreciate any help.

Thank you all

Susan

Hi Susan

Short answer, if she is LAFH (i.e. plans on returning, still has links home, etc) and her employer agrees to pay the allownace, yes, she can.

The LAFHA is entirely directed by the employer so hopefully they say yes if she asks about it, but often employer are scared of paying LAFHA's where an individual has slighlty unusual circumstances, i.e. where she is not a business sponsored work visa like a 457.

always worth her checking!

Cheers

Shannon

Hi, I'm in Perth with a 457 visa. I am a air-con tech from SA. My company and agency apparently don't know about a lafha allowance and says its trade specific. Do I qualify and how do I go about claiming?

Hi Wiaan

No, LAFHA is not industry specific and can be paid to anyone who meets the criteria.

It sounds as though your employer has not had much experience with LAFHA and unfortunately, if they are not willing to pay you this allowance, there is no other way you are able to claim it.

I would recommend that you speak with your company and inform them that you are eligible and remind them that it won't cost them any money, but rather save them money!

If needed, also volunteer to sign a voluntary declaration each year to remove any FBT liability from the company on to yourself.

Please call me if you have any other quereis!

Good luck!

Shannon

Hi

I am from the UK, and

I have accepted a position in Australia (different company than the UK) and I am on a temporary skills visa.

We are evaluating wheather we want to make this a perminent move or not, and as such, we have not sold our house in the UK which has a significant mortgage.

As we are on a temporary visa we are ineligable for and benefits here, and it will be 2 years before were can take-up PR should we decide to stay.

Can I apply for Liviang away from home allowance ?

I have been living in Sydney from NZ for 6 years and have never claimed the living away from home allowance. Can I still do this? Am I eligible?

Hi Simon/Kel

Some general comments that apply to both of your situations - technically you can not claim a LAFHA if your intention is not to return to your usual place of residence. So applying for PR, or remaining in Australia for a long period of time (generally considered grater than 4 years) will invalidate any LAFHA claim.

Simon - as a temp resident you can't claim family tax benefits but can claim spouse rebate through your tax return. LAFHA is separate to this.

Your employer may be willing to pay you a LAFHA which would consist of food and accommodation component to assist with additional expenses - you need to ask them about their LAFHA policy. I would recommend not telling them about your possibility of applying for PR as this will immediately invalidate your LAFHA eligibility. Only tell them once you have decided to apply as you can claim LAFHA technically up until the date you apply. Call me if you need further clarification.

Kel - Kiwis are a different story. Generally harder to claim because harder to show an intetntion to return home since you do not require a visa to be here. Also any time over 4 years in duration ahrd to argue unless a contract details you will only remain until a specified time. Again, being a kiwi you can stay as long as you like so very difficult to argue. Speak to your employer and see if they would be open to the idea. If so, we could write advice detailing your position and an argument for LAFHA - although it will be hard.

Any questions, please call.

Cheers

Shannon

Hi Shannon!

I read with interest your response to Simon. I am of the opinion that employers in most cases are aware of employees intentions to apply for PR at a future date, yet they still accommodate the LAFHA in most circumstances. Also consider the following:

a) The intended application for PR may never occur as a result of perhaps termination of service or the employee returning out of free will due to other circumstances.

b) a PR application may occur, but does not neccesarily be awarded, which will deem it neccesary for the employee to return to their home country.

What is your opinion in this regard?

I've always heard LAFHA payments can be made until PR is granted, not applied for for the reasons mentioned above- yes employers should not pay it if your intention is to stay perminantly, but intention is vague.

Hi Shannon, or anyone else that can help.

I am here as a nurse on a 457 visa and am about to change jobs, leaving Sydney for rural WA. Whilst I haven't previously claimed the allowance, as I was unaware of it am I able to claim it in my new job? My rent will reduce, but my general living costs and travel costs will escalate hugely. Do I need to get new employer to agree to it before I sign contract and before I submit visa application? Thanks

Hi Dave, Nick

I don't necessarily disagree with your comments regarding intention and certainty with applying for PR. However any prudent employer, knowing that you plan on applying for PR, let alone having applied for PR, should discontinue paying you LAFHA immediately.

Some may not understand the rules fully or the risks associated and continue paying it - that is their issue but not what is recommended.

If the ATO declares you are not LAFH and a LAFHA is paid, the company can be up for tens of thousands of dollars liability in FBT.

To be LAFH, you MUST have an intention, at some point, to return to your original home. If you apply for PR, or even have the intention of applying for PR in some cases, it shows that you plan on living in Australia PERMANENTLY, thus invalidating any claim you have for LAFHA. Although your applciation may be rejected, it still shows that your intention has changed and that you want to make Australia your home.

Becuase it is only an intention based test, we often write advice for people outlining reasons why they qualify for LAFHA and these have been presented to the ATO in disputes before.

We have also successfully argued against the ATO in LAFHA appeals - it is all subjective and intentions do change but you need to look at the particular facts in each case.

Denise - hospitals are already exempt FBT bodies so you may already be in receipt of certain tax exempt allowances. you can not package your base salary on a 457 under $43,440 - if you earn over this we can help you package additional allowances (on top of LAFHA) into an employment contract. You should certainly ensure that it is done prospectively. please feel free to call me for a free initial discussion.

Cheers

Shannon

hi, i have been in oz for nearly a year on a 1 year working visa from scotland.in this time i have found aemployer who has sponsered me for 4 years.i have mortgage etc back in scotland.At this time i do not intend to move back am i intilted to this and if so can i claim back since i arrived in oz

Hi Shannon,

You commented that you had information that could be presented to a company that is reluctant to institute LAFHA.

Please could you send this to me and any other documentation / suggestions you beleive would help me build my case.

Thanks in advance for your help.

Regards

Antoine

If a contractor from NSW, voluntarily decides to relocate to ACT for 12 months for a short term contract position with the intention to return back to NSW. Will they qualify for LAHFA?

The key point here is the person is voluntarily relocating in the pursuit of new work.

Thanks!

I can't believe the government and ATO actually endorse this stupid waste of money. Living in Australia is incentive enough to come live here, yet they offer tax payers money, and a lot of it, to so called 'skilled' workers to come here?! What is wrong with this place? This incentive should be limited to the elite; neurosurgeons, astronauts etc, people who genuinely have skills that no other Australian possesses.

Pirty - LAFHA is not something you are entitled to, it is something your employer can chose to pay you if you are eligible. If you don't intend on moving home then you technically can't claim a LAFHA.

Antoine - please feel free to give me a call and we can discuss your situation. Depending on your facts and circumstances there are different pieces of advice that we can tailor to your situation to get you the best outcome.

James - yes, LAFHA applies to internationals and domestics although often employers are less reluctant to pay LAFHA to domestic transfers. Technically they will qualify for a LAFHA however the employer needs to be satisfied that the employee does plan on returning home at the end of the temporary contract. It is irrelevant that the person volunteers to move - if they are still living away from home and meet the other LAFHA conditions, LAFHA can be paid. Again though, it is all employer directed.

Best of luck, please call me if any other questions!

Cheers

Shannon

Hi. I am currently employed as a 2nd year apprentice Carpenter living in the country.

I am thinking of moving to the city by myself and am looking for a transfer formy apprenticeship.

Am i eligable for LAFHA?

And if so, how much am i eligable for?

Hi Shannon and anyone else who can help.

I am from Ireland, originally I came out on a working holiday visa and then got sponsored. My employer has said because I did not come out for my job I am not entitled to the LAFHA allowance however, the only reason I am still in the country is because of my job.

Am I eligible and if yes, is there a good tax accountant I can use to process the forms etc. for me?

Thanks in advance for any help

Lisa

Hi Lorne,

Am I eligible for LAFHA? I came over from South Africa, was paid LAFHA, moved to another company and wasn't paid LAFHA, and have just been offered another position after being made redundant. Can I claim LAFHA, as I am over here for my job.

Many thanks

Gavin

Hi Shannon-

I came with my de facto spouse who is on a 457 and is receiving LAFHA. I was on a working holiday but have since gotten onto her Visa. I have a job here now and am wondering if I qualify? If so, what are steps I can take?

Thanks!

-Adrian

Hi does anyone have shannon's contact details? I can't seem to find any on this post.

Cheers

Hi All

Sorry, I've been really busy working this month and haven't had much time to check the status of the blog - apologies!!!

Tim - LAFHA can apply to domestic transfers but you need to prove to your employer that you intend on returning home after your aprenticeship has happened. If you plan on staying in the city, then you could be eligible for relocation benefits. Again, it is all up to your employer so speak with them to see if they are willing to help you out.

Lisa - Yes, you are eligible but ONLY if your employer is willing to allow it. The rules were recently clarified (May last year) to specifically state that you can transfer from a working visa and still qualify for LAFHA. We can provide you with some advice to speak with your employer about, but ultimately, it is up to them.

Gavin - Depends on your intention. Do you plan on returning to South Africa? Are you living here temporarily? Simply moving jobs a few times will not in itself, jeopardise a LAFHA position. I suggest you speak with your employer. They should be happy to allow it because it generates savings for them too!

Adrian - Assuming you meet the conditions then yes, you are eligible to receive a LAFHA. You technically can't 'double dip' for the same amounts as these will not be considered 'reasonable additional expenses' which is a condition that is required in the legislation.

We are able to go through the various conditions and payments to ensure you claim the most legally available to you.

Clyde - if you click on my name which is in bold and underlined my details come up.

p - 03 8635 1859

Although my firm specialises in expat tax and allowances, I'm always happy to have a free 10 minute chat to see if we can add any value to your situation.

More times than not, you simply need someone to tell you the truth rather than sifting through the myriad of lies that seem to get prined all over the web!

Best of luck,

Shannon

Firstly, the page is extremely useful and I have found some excellent advise.

I'm moving to Sydney in the next few weeks and obvioulsy interested in the potential savings.

I have one question regarding LAFHA on a 457.

However, at the moment I have no idea if I will want to return UK after the 4 years or live permanently in Australia.

Let's say I claim LAFHA allowance for 2 years and then I decide to get a permanent residency. Will I have to pay back 2 years worth of LAFHA allowance or do I just stop paying it?

Thanks

Dave

Hi Dave

Sorry about the late reply - I've been on holidays!

A lot of people are in your situation where they are not sure whether they plan on returning home or not.

Luckily, there is no requirement that you need to pay back your LAFHA if you do move to Australia on a more permanent basis - you simply must ensure that you notify your employer as soon as your intention changes.

It's often hard to pionpoint an exact time so we often advise employers that it is sufficient to cease paying LAFHA once an employee applies for Permanent residence (note applies, not when PR granted), purchases a property or sometimes, when a more permanent, open ended employment contract is signed.

It's up to the company when they stop paying it to you but as long as you have 'an intention' (whether or not this is definite or carried out) to return home and not a current intention to reside permanently in Australia, this should be sufficient to argue a LAFHA position.

Cheers

Shannon

Hi,

I must say this is one of the best pages I've found about the LAFHA. I am an accountant on a 457visa for 4 years. My employer says I am not eligible for a LAFHA as I have not been transferred and therefore have no place of work back in my home country. I disagree with them. At this stage I intent to go back to Germany. But 4 years is a long time and things can change. Therefore I would like to enrol as a chartered account. Does that have any effect on the LAFHA? Am I eligible or not?

Many thanks.

Mag

Hi,

Can an employer limit the lafha amount? As an example: Yearly rent = $30 000 and the company offers $15 000. Are they able to do that?

Thanks in advance,

Jakes

Hi Shannon,

I am Dutch and moving to Australia in June to perform a one-year fellowship as a plastic surgeon. I will be on a 442, occupational trainee visa. Will I be eligible for LAFHA?

Many thanks,

Marieke

Hi All

Mag - good to know that there will be an accountant out there who knows about LAFHA because a lot often don't!

Again, it's all down to your emploer but no, the fact you have not been transferred or have a job at home will not automatically dis-qualify you for being eligible for a LAFHA. See the discussion on this in NTLG FBT minutes of May 2008 or call me if you would like more clarification.

Jakes - yes an employer can limit the amount of a LAFHA you receive considering the entire payment of a LAFHA is employer directed. Although you may be eligible for the full $30,000, the employer bears all risk with making the payment (i.e. they are the ones who have to pay any tax on the amount if the ATO rules you are not LAFHA) so it is entirely up to them if and how much they chose to pay you.

We would be happy to provide you with advice detailing specific amounts, why you are eligible and how the company can mitigate their risk and save money through paying you more LAFHA.

Please feel free to contact me with any queries you may have.

Cheers

Shannon

I have to move to continue my apprenticeship. Over 100k's from home. I am 20 and a second year apprentice

Hi Sam

There is no specific rules which state what industries can receive LAFHA, so yes, if you are living away from home for work and plan on returning to your home location, you could be eligible for LAFHA.

You should make your employer aware that this allowance will possibly generate you thousands of $ savings, while also saving them money legally on obligations such as superannuation and workcover.

If you want further information please let me know.

Cheers

Shannon

Hi,

I am an IT Consultant on 457 for 2years (till 2010 end) and getting salary $62000 pa (except super). I am living (shared basis) in a company owned house and giving $100 as rent to the company. Amount deducted from my is PAYG & rent.

I dont to i am getting LAFA or not.

What is the amount fixed for LAFHA apart from the minimum salary level.

Hi Sharon,

If my employer will not pay me the LAFH Allowance can I claim my rent and living expenses as a deduction on the annual tax return.

Thanks, David

Hi,

Thanks for creating such an useful forum to discuss about LAFHA.

I’m currently working with a company who never done a sponsorship before (under visa 457) since January 2009, and I’m the first and only that they’ve sponsored. The payroll department knows nothing about LAFHA. As my understanding, LAFHA shall be stating in the employment contract. In my situation, there’s no mention about the LAFHA portion in my annual salary package. On top of that, the employment contract was actually requesting me to apply for PR status once I’ve settled down with the company. However, as at today I haven’t even start the PR application as I’m sure if this employment is stable (due to economic downturn, company might not confirming me a permanent employee).

Can you please advise me if I’m still eligible to claim back the LAFHA that I’ve missed since January 2009?

Thankyou.

Regards,

Ding

Hi there

Nik - there is no set or fixed amount of LAFHA which you are able to receive. It edpends on your facts and corcumstances and how much your employer is willing to allow you to include. Some employers allow LAFHA recipients to claim food, accommodation, kids schooling costs, relocation expenses - the list is almost endless!

IT workers on 457 visa's have a higher minimum salary level which they must be paid - this is currently at $59,480 and minimum of $43,440 for non IT workers. You can not salary package your base salary below this amount.

David - unfortunately no, you can not claim rent and living expenses as a dedution in your tax return as they are expenses classified as personal in nature and not incurred in relation to gaining assessabel income.

Cheers

Shannon

Hi,

Thanks for creating such an useful forum to discuss about LAFHA.

I’m currently working with a company who never done a sponsorship before (under visa 457) since January 2009, and I’m the first and only that they’ve sponsored. The payroll department knows nothing about LAFHA. As my understanding, LAFHA shall be stating in the employment contract. In my situation, there’s no mention about the LAFHA portion in my annual salary package. On top of that, the employment contract was actually requesting me to apply for PR status once I’ve settled down with the company. However, as at today I haven’t even start the PR application as I’m sure if this employment is stable (due to economic downturn, company might not confirming me a permanent employee).

Can you please advise me if I’m still eligible to claim back the LAFHA that I’ve missed since January 2009?

Thankyou.

Regards,

Ding

Hello:

Can I ask potentially a silly question:

If looking at your pay stub, should (TAXABLE ALLOWANCES TOTAL + NON-TAXABLE ALLOWANCES) x 12 = BASE PAY? (Assumption: Your paid on a monthly basis)

Hi,

I have accepted a permanent job in Sydney however my place of residence is in Melbourne. I have advised my company that I only have the intention of staying for a maximum of 2 years until the business has been established. I am currently renting in sydney and lodged a LAFHA application to PWC and they had advised me that my contract needs to state fixed-term not permanent in order to be eligible.

I don't believe this is correct as my family is in Melbourne and I'm always flying back and forth 2-3 times a month to see them. My intentions are to return home after the two years.

Is there any other way around this where I can claim the LAFHA?

Regards

UJ

1. You need to have sponsorship, so that you are a temporary resident. You cant claim on working visa.

2. you cant back claim. It is something done through payroll of you employer, not something you claim.

Hi there

Ding - One of the condition of being LAFH is that you intend on returning to your home location, i.e. you should not apply for PR. The fact that this is based in your contract could invalidate a claim for LAFHA.

You are not eligible to backclaim LAFHA as it must be done on a prospective salary sacrifice basis. You can possibly have some expense payments made on your behalf to help aleviate additional taxes paid to date. Please contact me if you want more information on this.

Interested party - sort of. Salary + taxable allowances + non-taxable allowances x 12 = annual remuneration package. Your base salary is generally just your taxable base employment wages.

UJ - Your contract does not need to state that it is fixed term although this is often a policy decision by your employer. The only way you can claim LAFHA is with the consent and assistance of your employer.

I would recommend that you negotiate with them to try and get around the policy or to amend your employment contract so it is line with the policy.

Best of luck!

Shannon

Clearing things up -

You can receive LAFHA on any type of visa as long as it is not a permanent visa. The conditions for qualifying for LAFHA are based on fact and not on visa/working classification.

You are not required to have sponsorship (working holiday visa holders can qualify - see this clarification specifically mentioned in ATO NTLG meeting minutes of 8 May 2008) nor do you necessarily have to have be classified as a temporary resident (if you have an Australian spouse you will be deemed an ordinary resident for tax purposes yet in most cases you can still claim LAFHA).

I hope that this clarifies things.

Cheers

i'm 17 years old, and i have recently found out i was pregnant so my mother told me shes not goin to help me and i gotta move out. am i eligable for living away from home allowence?

hi

thank you first of all for all the information re : LAFHA .

I am a doctor (registrar) moving from Uk to Australia on a 457 working visa and will earning around 95k. I was wondering whether I would receive LAFHA especially because public health workers tend to receive certain allowances... your reply will be very much appreciated... thanx joe

Gday, is it simple to assume that the benefit of lahfa would solely be the 47% tax benefit eg if i rented a place that was $1000 it would only cost me $530

cheers

Andy

Sarah - not sure if you're serious but a LAFHA can only be paid from your employer, where there is a requirement for you to move location for work purposes.

Hi Joe - I sent you an email with a little more detail. Pls let me know if you have any questions.

Hi Andy

Short answer, yes, the benefit you receive is the tax savings from being paid an allowance tax free, rather than being paid a cash, salary amount subject to tax at your marginal tax rate, which, can be as high as 46.5%.

Cheers

Shannon