Can anyone point me in the right direction to understand this?

What are you trying to understand? Every company is different with respect to expat benefits (assuming you are talking about an expat assignment). Your best bet is to speak to someone in your company's HR dept to understand the total expat package.

I get a housing allowance, cost of living adjustment, and travel allowance for living in Australia, but those are all calculated and determined by my company's HR dept.

I am looking for information about the "Living away from home allowance" tax scheme from the Australian government. I am trying to figure out what my effective tax rate would be and if I can afford to take this job.

The company I would be working for is an australian company and I would be working for them as a resident. similar to an H1-B in the states. i.e. no housing allowance, no car, no hardship, none of the expat perks, just a salary.

looking more into this, it is clear that I have no idea what I am talking about and I need to call their HR back

Yeah, suggest you call their HR. Sorry but I can't help you.

I work for an American company on a 457 business visa here. I have to file both US and Australian taxes, but of course my company pays all Australian taxes and performs tax equalization on all the "perks" that are added to my base salary.

Good luck and hope things work out for you. Australia is awesome.

Im on LAFHA, its awesome and gets me a good 400 extra a fortnight. You can calculate it online, just google LAFHA calculator. You can't buy property in Oz and you have to be on a 457 visa to get it. That said, I am in Sydney and it is very expensive here.

anyone in perth?

Hi Guys,

I’ll give you the facts on LAFHA because unfortunately this information is not widely known in a manner that is authoritative. You will even get differing answers from accountants in Australia, and certainly from payroll officers and HR departments and you will see the reason why below…however…these are the facts and I hope that assist you.

The reason the answers are varied is that LAFHA is the most misunderstood and underutilised allowance in Australia for three reasons.

The first reason is that there is no one repository of current knowledge on the ATO web site, and to make matters worse the immigration web site contradicts itself in 13 places.

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 is not an entitlement; it is only paid if your employer agrees to pay it.

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 that you must 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 claimsare 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 does not cost your employer any more money, and does not attract Fringe Benefits Tax if paid correctly.

• You can also claim things like:
o Removal and insurance of household effects to Australia and back home
o Temporary accommodation at home before you leave, and in Australia, and the same on the way home
o Storage of furniture at home
o Telephone, gas and electricity connection
o Leasing of household goods
o Return flights back home during your temporary stay in Australia

There are a number of LAFHA professionals in Australia who you can contact for advice. I’m not writing here to promote my business, simply to increase your knowledge so you can make an educated decision. Some charge a flat fee for the advice, others charge between 3% and 10% of each of your payslips for the same advice.

There is only one LAFHA Calculator on the web at http://www.payme.com.au/lafha-calculator.html. Again, not promoting my business, but giving you accurate advice so you can make decisions.

Bottom line, if you are on $60,000 on Australia, LAFHA is worth around $6,500 per year to you. If you are on $120,000 it is worth around $12,000 cash in hand to you and so on.

I hope this has been of some help.

Regards,

Ian


Ian Lindgren
CEO
PayMe Australia Pty Ltd
www.payme.com.au/lafha.html

I remembered this topic from a while back.. It looks like the LAFHA program is getting gutted for visiting workers. In the middle of 2012 workers on a 457 will no longer be able to claim the tax break (which can be around close to $15,000 annually for some workers with families). This is meant to encourage 457 visa holders to go on for permanent residency.

http://www.abc.net.au/news/2011-11-29/swan-reveals-budget-update/3701142

bravnot, I'll be in Perth this weekend, and next weekend