Potential changes to the LAFHA benefit

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July 2012 update: For the latest information on LAFHA changes, please click here.

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Hello all – it’s Simon here, Senior Tax Advisor at Smartsalary…

The Federal Government has released its proposed changes to Living Away from Home Allowance benefits.

Should these be endorsed, the two points that will most notably impact salary packaging can be summarised as follows:

1. Eligibility: eligibility for the living-away-from-home (LAFH) status is going to be severely limited for temporary resident employees (i.e., those on 457 visas) – in fact, most will no longer be able to claim LAFH status.

2Substantiation: All LAFH benefits will now need to be substantiated, although food reimbursements won’t be, as long as they are paid at “reasonable” levels.

These changes will not apply until 1 July 2012; however we expect that the number of customers who will qualify to salary package LAFH benefits will drop significantly.

So if you’re a visiting foreign worker, or a business employing visiting foreign workers, you might want to start thinking about some of the other salary packaging opportunities available to employees who move from one location to another.

For example, relocation exemptions can offer significant opportunities for savings around direct relocation costs PLUS some temporary accommodation benefits for eligible employees.  Equally, if you’re relocated to a remote area there are very generous concessions available for household rent and utilities.

Smartsalary currently offers these benefits to any business that elects to add them to the menu of benefits, so if you’re interested and these benefits are not already available then you should ask your employer to add them today!

Leave a comment here.

2 Responses to “Potential changes to the LAFHA benefit”


  1. 1 Harry May 20, 2012 at 11:19 am

    Good morning Sir/Madam
    I am working in Australia on VISA 457 currently getting LAFHA as my salary package like my other hundreds of colleages. I heard that we will not entitle for LAFHA from 1 July 2012. Is there anything else I can ask my employer to package in my salary to avoid additional tax. Thanks

  2. 2 Simon Ellis May 21, 2012 at 11:01 am

    Hi Harry

    Unfortunately there’s nothing that can deliver tens of thousands of tax-free dollars to you each year like LAFHA used to do. The bulk of the tax savings that were available to you under that benefit are now, sadly, gone.

    There are, however, still some salary packaging options around education costs for your kids and relcation expenses for you and your family. You should check the menu of available packaging options with your employer to see if any of these apply.


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Deven Billimoria
Chief Executive Officer
Smartgroup

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