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Living Away from Home Allowance (LAFHA)
Old 11th May 2012, 10:49 AM   #1
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Default Living Away from Home Allowance (LAFHA)

If you have been following news around the Budget you might have noticed that there have been some changes to the proposed LAFHA amendments. These changes are going to have a massive impact on 457 visa holders who currently enjoy LAFH privileges.

The government clarified the circumstances in which the allowance will be available as well as the start date for the reforms. However, it indicated that it will consult with tax experts and employers on the technical detail of the legislation.


The proposed changes are as follows:
  • Limiting access to the tax concession to employees who maintain a home for their own use in Australia, that they are living away from for work
  • Providing the tax concession for a maximum period of 12 months in respect of an individual employee for any particular work location
The government has stated that the changes will not affect:
  • The tax concessions for “fly in fly out” arrangements, as these employees will not be subject to the 12 month time limit
  • The tax treatment of travel and meal allowances, which are provided to employees who have to travel away from their usual place of work for short periods (generally up to 21 days)
Existing arrangements will not be subject to the new rules until 1 July 2014. New arrangements entered into after 7:30pm on 8 May 2012 will be subject to new LAFHA rules as of 1 July 2012.

UPDATE:


Last night (Thursday) the ATO and Treasurey clarified a number of issues in relation to the Budget announcement on LAFH benefits. In particular please note:
  • Transitional relief until 1 July 2014 is only applicable to permanent residents where those benefits are provided under an employment arrangement that was in place before 7.30pm on 8 May 2012.
  • Treasury has confirmed that, at this stage, the tax treatment of other benefits commonly provided to employees that are living away from home (such as the reimbursement of relocation costs, children’s education, leasing of household effects and overseas employment holiday transport, etc) is not being amended.
  • Next week the ATO will release some information regarding PAYG variation in respect of living away from home allowances paid to employees post 1 July 2012
  • An exposure draft of the legislation is expected to be released shortly
Anyone on a 457 visa should seek further clarification from your employer or tax accountant.

MH
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Old 11th May 2012, 11:23 AM   #2
Sheelagh Blanckenberg
 
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Sheelagh Brigid Blanckenberg Registered Migration Agent
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Bottom line - 457 visa holders who currently enjoy LAFHA will have this benefit removed come 1 July 2012. A shock for many as well as their employers who have factored in this benefit when tendering for a project and making offers to overseas employees. Who is going to be stuck with the extra costs come 1 July?

It will be interesting to see the impact of this change. Already many of our mooted resource projects are on the line due to spiralling cost of doing business in Australia. This change is likely to be one more nail in the coffin. Watch this space!!
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Old 16th June 2012, 12:57 PM   #3
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For us, I think this is really the final straw. We're already looking at returning to the UK next year, as it is becoming more and more difficult to make ends meet financially. This, coupled with terrible education here in WA, has for us secured the view that we are better off in the UK & can have a better quality of life.
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