Living Away From Home Allowance (LAFHA) For Subclass 457 Visa Holders To Be Reviewed

made the move to australia

In November 2011, the government announced reforms to the Fringe Benefits Tax (FBT) treatment of Living Away From Home Allowance (LAFHA) benefits to commence on 1 July 2012. In November 2011, the government announced reforms to the Fringe Benefits Tax (FBT) treatment of Living Away From Home Allowance (LAFHA) benefits to commence on 1 July 2012.

LAFHA is commonly used by employers to compensate employees for additional costs incurred when they are required to live and work away from their usual place of residence. This can include accommodation and food costs.

Under the current tax system, the provision of LAFHA can increase the take-home pay of employees, including subclass 457 visa holders. The Australian Government has concerns that LAFHA concessions are being exploited by some employers.

The Department of Immigration and Citizenship has received a number of enquiries about how these changes will impact subclass 457 visa holders.

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.

Click here for further information on the Australian Tax Office’s LAFHA requirements.



  • Let's Help You Get Down Under!
    Join Our Free Newsletter
    Join the 34,000 members who receive our Free Tips , News and Emigration Resources direct to their inbox.
    Subscribe
    Give it a try, you can unsubscribe anytime.

    1
    Leave a Reply

    avatar
    1 Comment threads
    0 Thread replies
    0 Followers
     
    Most reacted comment
    Hottest comment thread
    1 Comment authors
    Mark Challoner Recent comment authors
      Subscribe  
    newest oldest most voted
    Notify of
    Mark Challoner
    Guest
    Mark Challoner

    I’m not too sure why “Getting Down Under” has not covered the abolition of the living away from home allowance (LAFHA) in greater detail. This is a signficant factor in moving to this country for all temporary residents (457 Visa holders). If I hadn’t included LAFHA in my budget prior to moving, then it’s unlikely that I would have moved.