# Lafha



## Judy&Rob (May 31, 2011)

Hi, could anyone tell me more about LAFHA and the company specialising in this? I have been informed that I will not be able to claim this in Australia, only if you travel away from your home address in Australia to work elsewhere.... thanks.


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## Guest (Aug 2, 2011)

You dont claim it, your employer makes it available to you. If it is available to you depends on what visa you are on and/or your intentions in being in Australia. 

ie if you have moved into Aus on a 175 to NSW & find a job in NSW you wont get it.

If you settle in NSW then find a job in say NT you might be able to get it if you plan on keeping a home in NSW.

If you move to Aus on a 457 and plan to go back to the UK you can get it IF your employer will do it. If you plan on saying in Aus and applying for PR you are not entitled to it.

But if your employer is not willing or able to organise it for you then you are pretty much stuffed as it's not something you claim as such.


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## Judy&Rob (May 31, 2011)

We are going on a 457 vsa, but who can say exactly what plans you have!!

Is it only certain employers that do it?

Thanks


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## Guest (Aug 3, 2011)

You say what plans you have, to lie in order to get out of paying tax and get LAFHA is tax evasion. 

Yes only some employers do it. Some employers dont understand it, some dont have HR depts big enough to manage it. Most bigger employers will know what it is though.


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## Achilles (Apr 12, 2011)

Judy&Rob said:


> We are going on a 457 vsa, but who can say exactly what plans you have!!
> 
> Is it only certain employers that do it?
> 
> Thanks


I am in 457 and my employer provided me LAFHA until I lodged my PR application.


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## Judy&Rob (May 31, 2011)

Achilles said:


> I am in 457 and my employer provided me LAFHA until I lodged my PR application.
> 
> 
> Did you have to ask your employer??? and was this before you took your contract up?
> Seems very confusing, is it the employeer that looses out... if they dont all offer it? thanks


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## Judy&Rob (May 31, 2011)

You say what plans you have, to lie in order to get out of paying tax and get LAFHA is tax evasion. 

Yes only some employers do it. Some employers dont understand it, some dont have HR depts big enough to manage it. Most bigger employers will know what it is though.


Im not sure of our plans we go out once I am registered with AHPRA on a 457 visa, so its not about lieing , we will still have a house in the UK.

Do Empoyers have to provide it , if you ask? or is that not the case? thanks


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## Guest (Aug 3, 2011)

Judy&Rob said:


> Im not sure of our plans we go out once I am registered with AHPRA on a 457 visa, so its not about lieing , we will still have a house in the UK.
> 
> Do Empoyers have to provide it , if you ask? or is that not the case? thanks


 If you are atm planning on returning home and still have a UK home then you are eligible. Once you apply for PR (if at all) then it stops. 

You need to ask the employer if they are willing and able to provide it. They dont have to do it no but most big employers such as hospitals will already be doing it for others and have computer systems & HR depts big enough so it's no bother. Just ask them.


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## Judy&Rob (May 31, 2011)

_shel said:


> If you are atm planning on returning home and still have a UK home then you are eligible. Once you apply for PR (if at all) then it stops.
> 
> You need to ask the employer if they are willing and able to provide it. They dont have to do it no but most big employers such as hospitals will already be doing it for others and have computer systems & HR depts big enough so it's no bother. Just ask them.
> 
> ...


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## Guest (Aug 3, 2011)

Maybe speak to the employer once you are there. There is no loss to the employer because they are not giving you anything. All that happens is your tax allowance is increased so you get more take home pay to take into account the extra costs with maintaining 2 homes etc.


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## Judy&Rob (May 31, 2011)

_shel said:


> Maybe speak to the employer once you are there. There is no loss to the employer because they are not giving you anything. All that happens is your tax allowance is increased so you get more take home pay to take into account the extra costs with maintaining 2 homes etc.
> 
> 
> Thanks Shel....I will do i maytry the agency again, in look into it further


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## 133689 (Jul 14, 2011)

Judy&Rob said:


> Hi, could anyone tell me more about LAFHA and the company specialising in this? I have been informed that I will not be able to claim this in Australia, only if you travel away from your home address in Australia to work elsewhere.... thanks.




Hi Guys,

There are a number of companies that specialise in LAFHA, and PayMe is one of them. But you will find others of you google them. Most have a fee of 3 -10% for each pay you receive, and others have one off fees.

LAFHA is an allowance, approved by the Australian Taxation Office, which reduces your taxable income to assist with food, rent and other removal costs when you are working away from home. Your employer does not need to increase your pay, and if paid correctly your employer is not required to pay Fringe Benefits Tax.

LAFHA is paid in two main components, the Food Component and the Accommodation Component – however there are also additional travel, removal and storage of household effects and connection of utilities components.

Very few employers know much about LAFHA because LAFHA is the most misunderstood and underulitised 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.

The major thing to remember is that LAFHA is not an entitlement; it is only paid if your employer agrees to pay it. But you do “claim it” once you employer agrees to pay it. 

Now let’s focus on LAFHA and the additional cash in hand it gives you if you are eligible. Say you are coming across with a partner and one of you is on $90,000, (and you should always have LAFHA on the highest income earner).

If you were eligible for LAFHA, and your rental was $450/wk, then you would receive a reduction in your taxable income by $450/wk and with your partner you would be eligible for an additional reduction in salary for the food component of $289/week. So you don’t pay tax on $739 of your income each week and this will increase your cash in hand by $13, 468 per year. So not bad, plus there are other benefits as you will see later on. If you would like to know what you would receive based on your circumstances you can find a LAFHA Calculator. 

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 major things to remember about LAFHA are that:


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 (as you have already mentioned), so always control the communications yourself. 

LAFHA is usually worth about $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.

You can also claim things like: 

[*]Removal and insurance of household effects to Australia and back home

[*]Temporary accommodation at home before you leave, and in Australia, and the same on the way home

[*]Storage of furniture at home

[*]Telephone, gas and electricity connection

[*]Leasing of household goods

[*]Return flights back home during your temporary stay in Australia​
​
Never be afraid to seek assistance. Once your employer is certain that they “know they can legally pay you LAFHA at no additional cost and with no FBT, then you are usually on your way to being paid LAFHA correctly. 

I hope I have helped in some way.

Regards,

Ian


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## Judy&Rob (May 31, 2011)

*Lahfa*

Hi Ian,

Many thanks for your reply, could I just ask, exactly when would you ask your employer about it?? 

Before you commence work, first day there??? I just wondered!!!

I have already emailed the agency who I went through to get my job, I was informed by one person the company I'm going to work for will not provide LAHFA, but now I have emailed another person.... with the info you have provided above , and he has said he will look into it!

Im not registered yet with the nursing board, so have plenty of time to try and sort things out!

Many thanks again, just hope im able to claim it. 

Judy


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## twister292 (Mar 25, 2011)

_shel said:


> Maybe speak to the employer once you are there. There is no loss to the employer because they are not giving you anything. All that happens is your tax allowance is increased so you get more take home pay to take into account the extra costs with maintaining 2 homes etc.



Yes there is a loss to an employer. Employers have to pay FBT on parts of the LAFHA other than the accommodation component.


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## Guest (Aug 12, 2011)

twister292 said:


> Yes there is a loss to an employer. Employers have to pay FBT on parts of the LAFHA other than the accommodation component.


 Taken from the post from Ian above which is how I understood the system to be.....

*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.
*

and.................................

*# LAFHA is usually worth about $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.
*
If you know otherwise please elaborate?


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## 133689 (Jul 14, 2011)

Judy&Rob said:


> Hi Ian,
> 
> Many thanks for your reply, could I just ask, exactly when would you ask your employer about it??
> 
> ...



Hi Judy,

I think it is always best to ask the question up front, that way you can arrange to have the agency and the employer educated on LAFHA, but only if you feel you have good communications through your agency and it looks like you do now.

You will usually be up against well-meaning people who will say no to LAFHA just because so few people know about it. As an employer myself I always say to our team, “please don’t give me a problem…always give me a problem and a solution.” So please feel free to point the agency towards us, we can chat with them, and even the employer. 

Then if they want to provide you with LAFHA, you can always engage us, or any other LAFHA company, and get the documentation they need to confirm your eligibility and find out how to pay it, because LAFHA is FBT exempt, and does not cost your employer a cent. 

I’ll PM you my Australian telephone number so if either your agency or employer want to call that can, and that can ask for me. But as I say, there are other LAFHA companies to choose from as well.

Regards,

Ian

Ian Lindgren
CEO 
PayMe Australia – Premier providers of LAFHA
PayMe - LAFHA Specialists - Payroll Management


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## 133689 (Jul 14, 2011)

twister292 said:


> Yes there is a loss to an employer. Employers have to pay FBT on parts of the LAFHA other than the accommodation component.



Hi Twister,

I know we are both assisting the readers with what we believe is helpful information, but I am not sure where you are getting your advice re the employer having to pay FBT for LAFHA or incurring any cost at all other than a minor effort related cost for administrator labour to file documents. Just to clarify it for all readers, *there is no FBT payable or any costs to an employer on any element of LAFHA *so long as it is paid within the guidelines stated in the FBT Act and its supporting document MT 2030, in particular Paragraphs 4 and 5 which are written in plain English:

_4. The *exempt *(this means FBT Exempt) accommodation component is so much of the allowance as it is reasonable to conclude is in the nature of compensation for additional expenses on accommodation that the employee could reasonably be expected to incur. 

5. The *exempt *(this means FBT Exempt) food component is so much of the allowance as is reasonable compensation for additional expenses on food. It is arrived at by first ascertaining the "food component" of the allowance, as defined in section 136. _

All the other comments I mentioned in the previous post on Page 1 are best derived from the FBT Act itself which confirms that they are exempt FBT if paid correctly. I’ll reference each below at the end of each paragraph with S.58B meaning see Section 58 B of the FBT Act. If you know of an employer that is paying FBT when paying LAFHA then they are either paying it outside the guidelines or they have engaged an accountant that has not yet made himself/herself fully conversant with the complexities of LAFHA.

*Temporary Accommodation at the Home Location*. Should an employee be required to vacate their home prior to moving to the temporary location, the costs associated with that temporary accommodation excluding meals can be deducted from the employee’s taxable income on presentation of receipts. The maximum period permitted is 7 days before the relocation day (the day of departure) however there must be documented proof the employee was required to vacate, ie a lease commenced for a tenant. LAFHA Meal Allowance to the value the amount published each year on 1 April can be paid. Refer to S.61C. 

*Storage of Furniture*. Should an employee need to store furniture while working away from home, the cost of that storage can be deducted from the employee’s taxable income on presentation of receipts. Refer to S.58B. 

*Removal Costs*. The costs associated with removal, packing, unpacking and insurance of household effects can be deducted from the employee’s taxable income on presentation of receipts. Refer to S.58B. 

*Cost of Travel to the Temporary Location*. The cost of economy travel to Australia for foreign citizens, or within Australia for Australian citizens, and all dependents can be deducted from the employee’s taxable income on presentation of receipts. This includes all costs associated with that travel such as taxis, accommodation and meals. This is associated with the initial travel only. Refer to S.58F, S.142A and S.143A. 

*Short Term Accommodation at the Temporary Location*. Should an employee be required to live in short term accommodation prior to occupying long term home at the temporary location, the costs associated with that temporary accommodation excluding meals can be deducted from the employee’s taxable income on presentation of receipts. The maximum period permitted is 21 days. LAFHA Meal Allowance to the value the amount published each year on 1 April can be paid. Refer to S.61C. 

*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. Refer to S.58D.

*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. This needs to be claimed well in advance. Refer to S.58F, S 142A and S143A. 

*Foreign Citizens Only - Returning home while still temporarily residing in Australia*. An employee/contractor 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. Refer to S.61A, S.143A and S. 143C. 

*Foreign Citizens Only – Schooling*. Children’s education expenses may be included in LAFHA for the tuition fees paid to an educational institution or tutor for full time education. Children up to age 24 inclusive can be included and children can be studying anywhere in the world – not only in Australia. Refer to S.65A. 

Regards,

Ian

Ian Lindgren
CEO 
PayMe Australia - Premier Providers of LAFHA
PayMe - LAFHA Specialists - Payroll Management


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## Judy&Rob (May 31, 2011)

Ian Lindgren said:


> Hi Ian,
> 
> Thanks ery much for your reply...Im going to wait to see what comes back from O'Grady Peyton....Then take it all from there.
> See what they actually come up with , then prob contact your comapny in the near future.
> ...


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