Changes to Living Away From Home Allowances (LAFHA)
Most people currently receiving a LAFHA benefit will be impacted by the recent changes to LAFHA.
The most notable changes being
- Exempt food Allowance – There are New limits and Statutory Amounts applicable
- Accommodation Allowance – Only applicable to individuals who maintain a home in Australia and have an ownership interest. (The home must be available for use and cannot be rented out. (This will exclude most Visa 457 holders and foreign residents).
- Benefits are limited to 12 months (There are transition arrangements for individuals who had arrangements in place prior to 8th of May 2012. These transitional arrangements end 30th of June 2014. These transitional rules will have a benefit for Permanent Residents who maintain a home in Australia, however, for Temporary and Foreign Residents there is effectively no transition rules).
- Employees will continue to need to provide the employer with an Annual Statutory Declaration of any costs claimed under LAFHA.
Matters to be considered by Employers
- Review existing Employment Contracts being mindful of potential legal impact on renegotiating existing contracts with Employees.
- Continue to provide existing LAFHA benefits to Employees that are not FBT exempt and be liable for FBT tax, Pay Roll Tax and Workers Compensation costs.
- Renegotiate Employees packages increasing Salaries to compensate Employees for loss of LAFHA benefits. Where Employees are earning less than $180k pa, the additional income tax cost will be less than paying FBT on the benefits. Employers will need to consider and be aware of possible additional increased Statutory Superannuation liabilities.
- Substituting lost LAFHA accommodation benefit with LAFHA packaging of Government school costs which remain FBT exempt.
- Transitioning Employees on Visa 457 to Permanent Residence Visa 856.In this instance matters to be considered by Employers and Employees are
- Employee remain in Australia indefinitely providing security to family
- Employee not tied to work for Sponsoring Employer
- Employee can receive Medicare Benefits
- Employee can receive Social Security Benefits at a future date
- Government Schooling at minimal cost, and Hecs benefits for tertiary education
- Employee taxed as an Australian Resident on worldwide assets and income
For further information call Gordon Hatch on (02) 9411-4161 or email gordon@taurusfinancial.com.au
Securitor Financial Group Limited is not responsible for advice provided by Gordon Hatch/Taurus Professional Services Pty Ltd.