I am on a 457 visa and I am currently receiving the LAFHA. I asked my HR Manager today if the company would consider nominating me for permanent residency. HR Manager told me that as soon as I make my intentions known that I am wanting to stay in Australia permanently the LAFHA must stop. I am not sure if he is speaking from a company point of view (ie now they have a good reason to stop paying it) or whether he is quoting from Australian Immigration rules. Does anyone know if the rules are that the LAFHA cannot be paid if you decide to apply for permanent residency. If so does the allowance have to stop as soon as you apply OR once permanent residency is attained?

Can anyone let me know how much the LAFHA actually costs the employer. My understanding is that most of it is a tax break so doesnt come directly out of the employers pocket.

Your HR Manager is quite correct. As soon as you declare your intentions to stay permanently in Oz, the LAFHA conditions are no longer applicable as LAFHA requires your intention to be to return to your original country. I am pretty sure it would have to stop once you have lodged an ENS application. The ENS timescale is really quite quick compared with a Slilled Independent visa process - mine took about 7 weeks I think.

LAFHA is a fringe benefit and therefore the employer has to pay FBT on some of it - I think FBT only applies to the food and hardship components (if you get those) but does not apply to rent.

http://www.gomatilda.com/news/documents/The_Living_Away...m_Home_Allowance.pdf