Hello

We moved to Melbourne 4 weeks ago on my husbands 457 visa, and I am trying to get some clear information about LAFHA. He is sponsored for 2 years, but it is likely we will extend to 4. I have been searching through the site, and I now have a good idea of what it it is.

My husband earns $90000, plus $13000 car allowance plus super, and is a Commercial Manager / Quantity Surveyor (Construction). Our rent is $1650 pcm.

His company have never sponsored an employee before and have never heard of LAFHA. We are struggling to find them some diffinitive - and trustworthy- information so they they can actually calculate and apply this allowance.

Can anyone point me in the right direction? I have trawled ATO but can not find anything useful - a calculator would be great!

Also, would there be any cost to the employer by doing this? I have read something about Fringe Benefits, but don't really know that means in terms of monetary value.

In summary, what I am trying to find out is;
*Is there any information out there for employers / payroll on how to administer LAFHA?
*What the allowance thresholds are
*Are there any calcualtors out there?
*Does it cost the employer?
*How long can LAFHA be claimed for?
*Does this need to be in my husbands contract? (As currently it just states salary as detailed above) They are happy to change this if necessary.

Thank you so much for any info that you can provide.

K

Hi there,

My first advice would be that your husbands employers need to contact an accountant who knows about the ins and outs of LAFHA. There is very little info on the net about it.

So here are the answers/my thoughts to your questions:-

1. A competent accountant should be able to find out whay they need to know.

2. You should be able to claim your monthly rent plus a food allowance which is documented on the ATO website (there is also a link on here to the ATO page - I am surprised you didn't find it while your were searching for LAFHA posts). There is no guidance that I have seen regarding rent. However I would suggest that as long as your rent is not excessive and you aren't living in a 5 star penthouse apartment then there should be no issue ! $1650 pcm seems acceptable to me - we claimed $420 pw when we got LAFHA.

http://www.ato.gov.au/businesses/content.asp?doc=/conte...6140.htm&page=13&H13

3. No calculators that I know of - its not that difficult to work out.

4. Again you probably need to ask an accountant how Fringe Benefit Tax (FBT) affects them. What I can tell you is that the housing component does not attract FBT but the food component does. If the company doesn't want to have to pay FBT then they could just give the accomodation LAFHA - its better than nothing !

5. LAFHA can be claimed for as long as you are living here on a 457 visa and have not indicated your intention to make Oz your home. IE once you have lodged an application for any form of permanent visa you must stop claiming LAFHA.

6. YES - it must be in his contract. However I am not sure if it can be retrospectively applied as you are suggesting. You should find this bit out first as you may now not be able to claim it at all !

As I said above its really quite simple to work out.

Read this !

http://gomatildaforums.com/eve/forums/a/tpc/f/5726004143/m/5801034952

First work out the monthly amount of LAFHA you are entitled to (rent + food). So as an example this might be $3000 (allowing $306 pw for food).

Then subtract this from your monthly gross salary - $90,000/12 = $7500 - $3000 (LAFHA) = $4500. This is the amount that you will pay tax on. There are tax tables on the ATO website that tell you how much should be witheld each month to cover tax and medicare. The link to it is also on here in a recent post by me on the subject of LAFHA.

So if for example the tax to be withheld is $1000 your take home pay is $3500 (4500-1000). But here comes the good part ! You then get the montly LAFHA amount ($3000) added back on and you go home with $6500. LAFHA is a way to not pay tax on a proportion of your income. If you did not get LAFHA you would go home with maybe $5000.

Also read this for a more exhaustive explaination.

http://gomatildaforums.com/eve/forums/a/tpc/f/5726004143/m/5801034952

Hope this helps !

According to the Masters Tax Guide the taxable value of a LAFHA fringe benefit is the amount of the allowance that exceeds the amount reasonably necessary to compensate the employee for the cost of accommodation away from home and for the increased expenditure on food.

Thus both elements of accommodation and food are subject to the fringe benefits tax. As Colin says as long as the accommodation cost is reasonable there will be no assessment to the company for fringe benefit tax. In the case of food the ATO lay down tables and therefore any excess above these would attract FBT.

Even if there was an excess then the company would simply be required to gross up the excess at top marginal rate and this amount would be disallowed as an expense in their tax calculations.

LAFHA is meant to be an allowance paid over the top of salary to compensate for extra costs incurred being away from home. It is difficult to see how this could be made retrospective without it being queried by ATO but it is a matter to be addressed by the company lawyers and tax advisers.

Thanks to both of you for your great advice, hopefully by the end of the day this should be sorted.

Kelly

We are currently employing a Brit under 457 visa. We pay him LAFHA for food as per reasonable food component 1/4/07 of 493.00 (2 adults and 3 children) less the exempt compenent of $42 per adult and 21 for one child. This leaves 304.00 per week which we pay to him as a LAFHA allowance. Do we have to pay FBT on this amount

Hi my name is Ian Lindgren and I am the CEO of PayMe Australia the premier prividers of LAFHA in Australia.

Pumpeng, you will not attract FBT on the amount you are paying your employee because it is whithin the limits set down by the ATO on 1 April 2011. Do you know that you can also pay your employee LAFHA accommodation allowance and not attract FBT?

You can also pay your employee some or all of the following:

•Travel expenses from your permanent residence to your new (temporary) location. This includes fuel, transport, meal and accommodation costs based on receipts.
•Temporary accommodation at the permanent location up to 21 days.
•Temporary accommodation at new location limited to an occupancy period that begins seven days before you start work at the new location and ends when you could reasonably be expected to occupy long-term accommodation by lease; this is four weeks.
•Connection or reconnection of gas, electricity and telephone services to your new home so long as you had these connected at your permanent home.
•The costs of removal, storage, packing, unpacking and insurance of household effects, including pets.

None of which attracts FBT, or costs you anything so long as you follow the guidelines.

PayMe can advise employers on the guidelines, and specically the need to file certain documents as required.

PayMe also has a LAFHA Calculator on its web site.

Regards,

Ian