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LAFHA: Living Away From Home Allowance Restricted; Crackdown on LAFHA allowances for executives and foreign workers
Topic Started: 28 Nov 2011, 09:30 AM (3,399 Views)
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Housing benefits for workers could be scrapped

Posted on Tuesday, April 10 2012 at 2:04 PM

Rental tax perks for people living away from home for work could be scrapped in coming months, if the Federal Governments proceeds with proposed reforms.

Treasury released a discussion paper in November 2011 outlining changes to the Living Away From Home Allowance (LAFHA).

The LAFHA allows Australian and foreign workers to claim costs associated with relocating and living away from their normal place of residence, including rent.

Public submissions into the proposed reforms closed in February.

The government is expected to release draft amendments outlining its intentions in the next month, before opening up another round of consultations.
Any changes would take effect from July 1.

Read more: http://www.apimagazine.com.au/api-online/news/2012/04/housing-benefits-for-workers-could-be-scrapped
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NotFooled
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The Bear Whisperer

nipa hut
30 Nov 2011, 10:43 PM


Do these people vote? No, they're foreigners.
Are they poor? No, most of them sit at the 99th percentile of income level.

OMG, Wayne, that's a tough budget decision. Think of the (foreign expatriate) children...!!!


Curiously though, NewsCorp saw this as "adding another blow to the nation's competitive edge". Apparently, in MurdochWorld, Australia needs to subsidise foreign nationals to run Australian companies, in order for Australia itself to be competitive. No wonder the Murdochs themselves have become Americans.
These are some of the smartest and most talented workers. Driving them away is idiotic. And Australia sliders further away from being the "clever country".
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BubbleBoy
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NotFooled
12 Apr 2012, 11:25 PM
These are some of the smartest and most talented workers. Driving them away is idiotic. And Australia sliders further away from being the "clever country".
I'd be eager to see evidence that taxing these "smartest and most talented workers" in the same way that most permanent residents/citizens are taxed would "drive them away". I'd suggest there is little to no such evidence.

The LAFHA tax concession was enacted to encourage domestic labour mobility - eg live in Melbourne, go to Sydney for 2 years and get allowance there - tax concessions apply to this allowance because you have additional expenses.

However - what it is now currently often used for is to give temporary workers a tax break, eg come from England here on temporary Visa - get salary of 90K and allowance for 30K, much less tax gets paid than if permanent resident living in Melbourne gets paid by his Melbourne employer 120K. I see NO reason why this should be the case.

The government's consultation paper on this issue is here, and gives a good overview of the history and aims of the tax concession
http://www.lafha.com.au/news/11-12-14/Q_As_For_Proposed_LAFHA_Changes.aspx
Edited by BubbleBoy, 13 Apr 2012, 12:46 AM.
My name is based on a Seinfeld character, not on a belief of a housing bubble.
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Thatguy
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It's a total rort. They need to tighten the rules severely or just bin it. I know of several people who earn $3500++ per week each who are claiming living away from home benefits. They live all live in luxury apartments in the centre of Sydney and earn multliples of the income from their home countries. They don't need the money, they barely know how much they earn each week, they only claim the money because they can and they tell all their friends in similar situations to do it too. Amazing loop hole.
Edited by Thatguy, 14 Apr 2012, 12:34 AM.
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nipa hut
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NotFooled
12 Apr 2012, 11:25 PM
These are some of the smartest and most talented workers. Driving them away is idiotic. And Australia sliders further away from being the "clever country".
Straw man alert!! Nobody's arguing that smart and talented workers should be driven away.

The question is whether the foreign ones should be automatically be entitled to a taxpayer-funded subsidy to attract them here, instead of expecting that their Australian employer would pony up a suitably attractive package without such a subsidy.

If they are so smart and so talented, and therefore presumably of such strong potential benefit to a given Australian employer, why is *any* government subsidy required in the business case for the employer to bring them over...??? Why don't employers simply pay the market rate for bright, capable expats?

:hmm:
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Rastus2
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NotFooled
12 Apr 2012, 11:25 PM
These are some of the smartest and most talented workers. Driving them away is idiotic. And Australia sliders further away from being the "clever country".
meh,

if they are such an amazing asset to a business then I'm sure the company will just take the extra cost on the chin to keep them.

Naturally, if the companies decide they are not worth that little bit extra cost, then perhaps the law of supply and demand rules above the tit of government subsidy.
Shadow - Defrauded his Bank ? 2015 I have 9 different loans and my bank had no idea which ones were personal and which were investment. They had half of them classed incorrectly. When this change came in they asked me to tell them if any personal loans were incorrectly classed as investment, which I did, and they switched them to personal for the lower rate. They also had a couple of investment loans incorrectly classed as personal. They didn't ask me about those. So they stay on the lower rate too. Worked out pretty well. :)
Shadow - 2008 Sydney Median House Price 1.25M by 2014-2015

Shadow : I think this boom has already begun in several cities. My prediction :
Peak of boom: 2014-2015. Sydney Median Price: $1,250,000 Bottom of bust: 2017-2018. Sydney Median Price: $1,100,000

Shadow's Original 2010 House Boom and Crash prediction http://s836.photobucket.com/user/rastus22/media/shady-orig-2010-chart.png.html?sort=3&o=0

Shadow's attempt to edit his 2010 chart in 2015 and replace it with one that does not show a crash in 2013 http://s836.photobucket.com/user/rastus22/media/Screen%20Shot%202015-06-06%20at%207.12.52%20pm_1.png.html
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Foreign workers' tax blow

Daniel Flitton
May 8, 2012

FOREIGN workers in Australia stand to be punished under tax changes in the federal budget at the same time as the government is striving to attract more overseas labour to meet regional skills shortages.

In changes expected to reduce the salaries of thousands of foreign workers already here, the government is planning to cut tax breaks that allow people living away from home to deduct rental and food expenses.

The government has billed the changes as an attempt to stamp out rorts by highly paid senior executives and said local fly-in, fly-out workers in the mining sector will be exempt. But the impact will be keenly felt by those on temporary 457 visas who have accepted jobs in Australia with the expectation of tax relief.

Some foreign workers fear a $20,000 hit for those recruited to a wage of about $130,000.

Read more: http://www.theage.com.au/business/federal-budget/foreign-workers-tax-blow-20120507-1y94f.html#ixzz1uKZYhiOR
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Foreigners, payouts targeted on tax concessions

THE government will slash tax concessions for foreign employees and workers receiving golden-handshake redundancy payouts. The measures, which Labor insists are designed to make the tax system fairer, will save the budget almost $1.2 billion over four years.

The government will change the tax concessions applying to living-away-from-home allowances by limiting access to employees who maintain a home for their own use in Australia.

Labor will also impose a 12-month time limit on how long an employee can receive the tax concession at a particular work location. Wayne Swan said there had been concern that the allowance was being exploited by highly paid executives and foreign workers.

"These further reforms will stop businesses from being able to give a very large taxpayer-funded tax break to employees who aren't maintaining a second home, or are maintaining two homes indefinitely," Mr Swan said. The policy change will not affect fly-in fly-out arrangements. Nor will it affect the tax treatment of travel and meal allowances which are provided to employees travelling from their usual place of work.

The changes to the living-away-from-home allowance will save the government about $1bn over four years.

Read more: http://www.theaustralian.com.au/national-affairs/treasury/foreigners-payouts-targeted-on-tax-concessions/story-fndbwnla-1226350393009
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Thatguy
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NotFooled
12 Apr 2012, 11:25 PM
These are some of the smartest and most talented workers. Driving them away is idiotic. And Australia sliders further away from being the "clever country".
How many of these people have you met? I know several and had one up here for the weekend. She cared so little that even when I brought it up she just shrugged and mentioned she'll be permanent resident anyway. She certainly doesn't expect to get a tax break. Her friends she knows that she's talked to about it also do not factor it into leaving the country.

I haven't talked to the other, but for most of them they only claim because they can, not because they need to or factored it into their plans to work here.

A complete waste of money for creating it. IF the worker is so valued the company needs to jack up the pay leave them on equal after-tax income.

Pretty simply really. We ARE a clever country, but we're also a country that relies on digging stuff out of the ground and not planning for the future. I've lost count of the amount of IP I have seen move into foreign hands simply because there is no appetite for investment in high-tech products in this country because all the money is spent on basic project leveraging off our natural resources.
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Rastus2
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one of the better decisions made by the gov.

If those foreign workers are so important to a company, they will stump up the extra $$$ to make up for the change in taxation. If not, well it was not an issue to start with.
Shadow - Defrauded his Bank ? 2015 I have 9 different loans and my bank had no idea which ones were personal and which were investment. They had half of them classed incorrectly. When this change came in they asked me to tell them if any personal loans were incorrectly classed as investment, which I did, and they switched them to personal for the lower rate. They also had a couple of investment loans incorrectly classed as personal. They didn't ask me about those. So they stay on the lower rate too. Worked out pretty well. :)
Shadow - 2008 Sydney Median House Price 1.25M by 2014-2015

Shadow : I think this boom has already begun in several cities. My prediction :
Peak of boom: 2014-2015. Sydney Median Price: $1,250,000 Bottom of bust: 2017-2018. Sydney Median Price: $1,100,000

Shadow's Original 2010 House Boom and Crash prediction http://s836.photobucket.com/user/rastus22/media/shady-orig-2010-chart.png.html?sort=3&o=0

Shadow's attempt to edit his 2010 chart in 2015 and replace it with one that does not show a crash in 2013 http://s836.photobucket.com/user/rastus22/media/Screen%20Shot%202015-06-06%20at%207.12.52%20pm_1.png.html
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