457 Visa Approved, how can I get LAFHA for US citizen??

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457 Visa Approved, how can I get LAFHA for US citizen??


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Old 08-19-2011, 08:10 AM
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457 Visa Approved, how can I get LAFHA for US citizen??

My 457 was just approved today, total time was only 30 days including company sponsorship/nomination, my filing and approval. How can I get the LAFHA, does the company need to file it or can I file it on my own? Please help me to get this allowance, it would greatly help with the double tax situation and cost of living.


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Old 09-02-2011, 01:28 AM
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Hi,

My name is Ian Lindgren and I am the CEO of PayMe Australia - the premier providers of LAFHA and I am happy to help! LAFHA is an allowance that your employer pays you by effectively reducing the tax you pay, and paying that amount to you as LAFHA. Therefore it’s a tax free allowance and does not cost your employer a cent.

I’ll give you the full run down on LAFHA so you see the entire picture because there are many opinions on blogs, and while evey one is well intentions, few are 100% correct and this causes confusion…you’ll see why in my notes below.

Why is it hard to find Consistent Information on LAFHA?

LAFHA is arguably the most misunderstood and underutilized allowance in Australia for three reasons:
  • The first reason is that there is no one repository of current knowledge on the ATO web site.
  • 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 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.

The Main Components of LAFHA

The two main components of LAFHA are:
  • The Accommodation Component. The accommodation component is exempt from FBT where it is “reasonable” to conclude that the nature of the accommodation is such that the costs are those that the employee could reasonably be expected to incur. It is usually paid to the amount of an accommodation lease.
  • The Food Component. The food component is paid exempt from FBT when it is paid to the amounts published by the ATO each new FBT year.
Other Claimable Items

The other claimable items are:
  • Temporary Accommodation and Food Allowance at the Home Location. Up to 7 days.
  • Storage of Furniture. Should an employee need to store furniture while working in Australia, the cost of that storage can be deducted from their taxable income on presentation of receipts.
  • Removal Costs. The costs associated with removal, packing, unpacking and insurance of household effects can be claimed in on presentation of receipts.
  • Cost of Travel. The cost of economy travel to Australia for foreign citizens, or within Australia for Australian citizens, for the employee and all dependents. This includes all costs associated with that travel such as taxis, accommodation and meals.
  • Temporary Accommodation and Food Allowance at new Location. Up to 21 days.
  • Utilities Reconnection. The connection of gas, electricity and telephone services to the new home may be claimed presentation of receipts so long as it can be proved that those services were connected at the home locality.
  • Cost of Travel home at the end of the temporary Employment. The cost of economy travel to return home for the employee/contractor and all dependents.
  • Foreign Citizens Only - Returning home while still temporarily residing in Australia. An employee may return home any number of times a year, and subject to supplying receipts, claim 50% of the cost of travel for the employee/contractor and each of their dependents. This includes all costs associated with that travel such as taxis, accommodation and meals to and from the location.
  • Foreign Citizens Only – Schooling. Children’s’ education expenses can be included in LAFHA for the tuition fees paid to an educational institution or tutor for full time education.
The key items that you must remember about LAFHA are that:
  • It is not en entitlement; it is only paid if your employer agrees to pay it, and to agree to pay it, your employer and his/her financial advisers must know the facts on LAFHA.
  • 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, so always control the communications yourself.
  • LAFHA is usually worth about $10,000 - $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.


What is LAFHA Worth to Me?

If you would like to know roughly what your cash in hand would increase by considering the accommodation and food components only, see LAFHA Calculator at our web site...this is the only LAFHA calculator in Australia. This underestimates it for most people because it is based on a rental of $350 per week which is low.

How to you go about Requesting LAFHA

There are two ways in general. You can ask you employer to pay it to you, and in general because they don’t know all there is to know about it, they say no, or only pay you a portion based on the reasons I stated above.

Or you can ask one of the LAFHA providers in Australia to professionally assess you, PayMe is just one of these companies, and what we provide through a one off fee, is you eligibility, all the advice your employer’s accountant will need to know LAFHA can be paid to you legally without attracting costs and taxes, and we also advice your employer how to actually pay it in their pay system, and administer it throughout your time with them. I believe the other companies provide a very similar service.
You don’t need to file anything; it is all done by your employer/

I hope that has assisted.

Regards,

Ian Lindgren
CEO PayMe Australia


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Old 05-01-2012, 12:22 PM
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Users Flag! From uk

Rather than reading the trolling cut-and-paste sales pitch above it might first be worth reading this :

FBT living-away-from-home allowance reform

LAFHA will be severely restricted for Non-Australian residents on a 457 such as yourself.

The post above is annoying, misleading and devalues this forum and makes no mention of this change with is effective from July 1


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Old 05-01-2012, 11:58 PM
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Join Date: Jul 2011
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Users Flag! From australia

Quote:
Originally Posted by Woppa View Post
Rather than reading the trolling cut-and-paste sales pitch above it might first be worth reading this :

LAFHA will be severely restricted for Non-Australian residents on a 457 such as yourself.

The post above is annoying, misleading and devalues this forum and makes no mention of this change with is effective from July 1
Hi,

I think that if you look closely at the date that was posted last year well prior to the changes in LAFHA being published. If you do a google search for LAFHA Info Blog you will find the most up to date and accurate infomration on what is happening with LAFHA in Australia.

Regards,

Ian


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