Bye bye LAFHA, no more gravy train

mandrake04

duke916 wrote: »

i just hope processing times will considerably speed up as its unfair having life on hold for what seems like an eternity, not knowing when your number is going to be called. 2 years and counting....

Their 'estimated' processing time and 'realistic' processing times are completely different. For the last two years all people keep asking me is 'so when are ya heading off? when in fact they know as much about it as I do.

Mate I reckon you will get it next year, from July 2012 to Jan 2013 they won't be accepting any 175 or 176. That's 6 months worth of catch up (about 54,000 visa's)

LizOHagan

Not much use to you Duke but this is one of the reasons the process is changing...so backlogs can be avoid and skill shortages met quicker.

Hope it comes through for you soon..Liz

MrThrifty

mandrake04 wrote: »

There is going be a lot of disappointed people over the next 6 months there is already a big scramble for Skills assessment IELTS and limited State sponsorship so people can get in an application before the changes.

Hopefully this thread is not too old to continue... Asking a silly question maybe, why would people be disappointed? Are you thinking that a backlog with the skills assessment authorities and IELTS exams will mean that people might not get their application in before the proposed changes in July 2012? Or is there a possibility that even if you get your application in before July 2012, it may end up getting processed under the new system (invitation required)?

mandrake04

MrThrifty wrote: »

Hopefully this thread is not too old to continue... Asking a silly question maybe, why would people be disappointed? Are you thinking that a backlog with the skills assessment authorities and IELTS exams will mean that people might not get their application in before the proposed changes in July 2012? Or is there a possibility that even if you get your application in before July 2012, it may end up getting processed under the new system (invitation required)?

Those requiring state sponsorship, depending on your occupation as the states only issue x number of any particular occupation in a fiscal year. In some states a few occupations x has already been reached and its only December, you need IELTS and Skills assessment to apply for State sponsorship so there is a bottleneck in those two areas.

Factor in the January holidays and the sheer volume of applications its going go down to the wire. Its like setting up dominoes to all fall in series.

If you get an application in before July is will be processed under the old process.

MrThrifty

mandrake04 wrote: »

... as the states only issue x number of any particular occupation in a fiscal year.

Thanks, I hadn't realised that. Ah sure, there's always the easier option of just getting sponsorship from abroad I guess... JOKING! -just winding you up!

mandrake04

MrThrifty wrote: »

Thanks, I hadn't realised that. Ah sure, there's always the easier option of just getting sponsorship from abroad I guess... JOKING! -just winding you up!

Its not impossible to get sponsorship from abroad, but after July it will be the only option for some.

coldpaw

Hi, thought I would add my questions here:

I will be taking up a full time job early in the new year. Would people recommend I attempt to get the LAFHA until July?

I have heard that it is best to apply through a payroll company to catch the allowance. Does anyone know how this works? I will not be paid through a payroll company automatically, so would people recommend I use one until July and then switch back? Anyone know a good company in Sydney?

Finally does anyone have an indication of how long the 457 sponsorship process takes. There is a strong chance I can get sponsored through this position, but I have to do 3 month's probation first. As I am on a 2ndWHV this mean I can only work for another 3 months with the company.

Thanks for all the help

hussey

Don't use a payroll company if you can, yes it's definitely worth it if you can get it via your company.

You can then go option of payroll company, but just make sure you know what rates they charge etc etc

457 can take anywhere between 2 days and 2 months. You can apply for a bridging visa which allows you to stay working after 6 month rule is up - more info do a search on the forum

coldpaw

Sorry im back again with more Lahfa questions.

Does anyone know if you are entitled to LAFHA on a 417 working holiday? Im nearly sure some of my friends here are getting it but in work they told me it was not possible.

Also work have told me that you can only claim LAFHA for 18 months (I know it finishes in July) and you must state that you intend to leave the country otherwise they will hit you with a tax bill if you stay.

Im not sure whether it is my ignorance or poor advice from work, but if possible I want to claim while I can without detriment to any future visa and residency applications.

Cheers ya'll

Barry

hussey

It is possible and some companies offer it - mainly pay roll companies like Geoffrey Nathan etc etc, but it is dodgy as, LAFHA is an employee fringe benefit that is given to you by your employer, so if something goes wrong then they are liable.

You can start LAFHA when ever your employer deems fit, and it's up to them to define what they believe is the criteria.

My old employer said I could claim it, but I needed a home to claim it, i.e. living away from home - meaning I needed to own property.
I argued for months but never got there. As I said it's up to them

coldpaw

Thanks Hussey.

Ill just roll with it and see if I can prise it out of them and in the meantime try get more info.

karl bracken

So in lay mans terms if your on LAFHA (im not) unless you are fly in fly out you are loosing it?
living and working in Sydney will not cut it on 457

didnt really get this bit below?

individuals will be required to substantiate their actual expenditure on accommodation and food beyond a statutory amount.

hussey

Living in sydney and your 'home' being Ireland can not be classed as LAFHA anymore,
but of you work in sydney and your job ships you off to wagga wagga for 3 weeks, you can get LAFHA. Doesn't have to be FIFO (in fact I don't think that counts at all)


That was what the tax benefit was suppose to be for, rather than foreign workers claiming it since their home was not Australia

ellaq

FIFO don't get it.....as your employer provides your food and accommodation.

Feelgood

Bit of an update

Immi Migration Blog

From the department’s perspective, if an employer committed to pay a subclass 457 visa holder LAFHA, it is expected this payment will continue. The only difference will be how the Australian Taxation Office (ATO) views such payments.

For example, if a sponsor committed to pay a subclass 457 visa holder a base salary of $75 000 plus a $10 000 LAFHA, the department expects the employee will continue to be paid a total of $85 000.

If a sponsor is unable to pay the amount equivalent to the LAFHA they may be failing their sponsorship obligations.

A sponsor may decide to lodge a new nomination application to amend the salary offered to the 457 visa holder. However, the sponsor must demonstrate that the new salary continues to be the market salary rate.

loueeeeeez

its a whole load of c*** anyways, you're better of paying the full tax on your salary cause you'll get it all back when you go home, its a way of saving!

hussey

loueeeeeez wrote: »

its a whole load of c*** anyways, you're better of paying the full tax on your salary cause you'll get it all back when you go home, its a way of saving!

No - that's not true at all. Lafha is a huge benefit.

You do not get 'all your tax back' when you leave Australia, that's a myth, you get tax you have overpaid. If someone tells you they got all their tax back, it's usually as they have been paid less than 40k (called the low income offset) and have not worked through the year.

dave3004

loueeeeeez wrote: »

its a whole load of c*** anyways, you're better of paying the full tax on your salary cause you'll get it all back when you go home, its a way of saving!

So many points wrong with this.

1 - Not everyone on a 457 wants to go home. Indeed being on a 457 probably means you want to stay (and the person is claiming LAFHA for years up to but excluding the year they need to apply for residency)

2 - Even if they do want to go home, there is a roof on how much tax you can claim back per annum. So you may pay 10k tax but can only claim 7k back - The LAFHA helps ppl avoid this situation also

The update is good news for people on a 457 visa but bad news for the sponsors. I am going to not say a word and hopefully it’s a seamless transition :P

hussey

dave3004 wrote: »

2 - Even if they do want to go home, there is a roof on how much tax you can claim back per annum. So you may pay 10k tax but can only claim 7k back.

Didn't know of any roof limit - do you have a link for this?

digiman

Just got my first payslip there today and got the full LAHA on it, $650 for rent and $289 for food. I will be supporting my girlfriend until she gets a job so thats why I got extra for the food allowance. I will have to change it back once she gets employed I assume.

Will she also be entitled to claim $650 for rent also? She is a de-facto of mine under my 457.

Also, if I apply for PR next year will I have to pay back all the LAHA that I received?

hussey

digiman wrote: »

Just got my first payslip there today and got the full LAHA on it, $650 for rent and $289 for food. I will be supporting my girlfriend until she gets a job so thats why I got extra for the food allowance. I will have to change it back once she gets employed I assume.

Will she also be entitled to claim $650 for rent also? She is a de-facto of mine under my 457.

Also, if I apply for PR next year will I have to pay back all the LAHA that I received?

She can claim LAFHA only if her employer allows her to. You both can't claim 650 rent allowance. She can only claim her rent, if you are paying 650 then you can claim that. You don't have to pay it back if you claim PR. but as soon as you apply it stops.

karl bracken

I wonder how it will work after June, like whos responsible for stopping the LAFHA.
If you employers dont stop it in time do they have to pay any tax bills or tax adjustments for you?
Or will it be the responsibility of the employee and you could be left with a big tax bill after June 2013 if you dont have it stopped?!

spanish_sahara

karl bracken wrote: »

I wonder how it will work after June, like whos responsible for stopping the LAFHA.
If you employers dont stop it in time do they have to pay any tax bills or tax adjustments for you?
Or will it be the responsibility of the employee and you could be left with a big tax bill after June 2013 if you dont have it stopped?!

Has anyone spoken to their employers about this yet?

Legend100

spanish_sahara wrote: »

Has anyone spoken to their employers about this yet?

I work in the tax dept of a company in Sydney and we have let our HR/payroll staff know that all LAFHAs are to stop come the first of July. The HR/payroll depts have let the relevant employees knows the situation so I would make an enquiry with your employer to check that all is in place

Lafha (at the meoment) hasnt actually got anything to do with tax, it is an FBT exemption and when the regulations are amended in July, any Lahf benefit will no longer be an exempt FBT benefit but rather taxable as salary.

Word of warning too people that you must remember that your package initially was probably budgeted at "x" and when the benefit is given as salary, this will bring on-costs such as payroll tax and workers comp so if your company has tight salary budgets, you may be in for a reduction in salary to cover the on-costs

tezzy_v2

Hi guys

Basically with LAFHA there are now two options come 1 July -
1) the employer takes the FBT hit on the amounts paid (this will depend on whether you are being reimbursed for the rent or whether you are given an allowance ie a cash amount to cover a reasonable amount of rent)
2) the employer lets you take the tax hit on LAFHA

Option 1 is not likely going to happen in most instances unless you have massive bargaining power with your employer.

Option 2 is the way most employers are being advised to proceed.

EG I claim LAFHA for both myself and my spouse - we pay 560 a week. With LAFHA gone we will be down over 1k a month take home. That is a lot of money....

The provisions relating to LAFHA have not been written into law yet - it is expected they will only be released on Budget night (in May) However it is not expected that there will be any changes to what has already been communicated.

One thing to note is if you are a permanent resident of Australia and you have a home in Brisbane let's say and you maintain a home in WA for instance for work - you will still qualify for LAFHA. Some people will still get it. Most of us Irish on 457s won't.

Watch this space.....how do they think they can cut salary's by for most people is going to be between 10-20% and not get backlash?

jackbhoy

tezzy_v2 wrote: »

Watch this space.....how do they think they can cut salary's by for most people is going to be between 10-20% and not get backlash?

Backlash against employers or government? The latter couldn't care less as most affected, like yourself, don't have a vote. Plus closing tax loopholes like this will be pretty popular with the average Aussie.

mandrake04

tezzy_v2 wrote: »

Watch this space.....how do they think they can cut salary's by for most people is going to be between 10-20% and not get backlash?

well maybe they are thinking you have 2 options.

a) you just wear it.

b) you are entitled to leave your job if you are not happy and they sponsor someone else under a new contract for the same money and not mention anything about LAFHA.

kdevitt

(Appears to be) Great news in the budget for anyone currently receiving the LAFHA -

The Government will further reform the tax concession for living‑away‑from‑home allowances and benefits, by ensuring it can only be used for the expenses of people who are legitimately maintaining a second home in addition to their actual home, for a maximum period of 12 months.

This reform will apply from 1 July 2012 for arrangements entered into after 7.30pm (AEST) on 8 May 2012, and from 1 July 2014 for arrangements entered into prior to that time.

mandrake04

If you are a non-resident worker…
It's all bad news. Firstly, most of you will lose the Living Away from Home Allowance (see below), and from 1 July all non-resident workers will have to pay a blanket 32.5 per cent tax rate – regardless of whether they're low income earners.

If you receive LAFHA…
You're not laughing anymore and will have to say cheerio to the lucrative Living-Away-From-Home-Allowance.

The new reforms mean it can only be used for the expenses of people who are legitimately maintaining a second home in addition to their actual home. So, Ireland or England doesn't count as a second home for most people who are here on a working holiday and 457 visas. It was good while it lasted - sorry guys.

http://www.heraldsun.com.au/money/federal-budget-2012-what-it-means-for-you/story-fn84gmep-1226350235644
http://www.news.com.au/money/federal-budget/federal-budget-2012-what-it-means-for-you/story-fn84fgcm-1226350235644
http://www.dailytelegraph.com.au/money/federal-budget-2012-what-it-means-for-you/story-fn84gkmz-1226350235644

karl bracken

Does this 32.5% apply to people being taxed as residents but on a 457?

Or does this mean the old tiered system will apply with the higher 18200 tax free treshold?

Or is every non resident just going yo hand over 32.5% of everything no matter what visa or how your being taxed?!