- Access to the LAFHA tax exemption for temporary residents will be limited to those who maintain a residence for their own use in Australia, which they are living away from for work purposes, such as “fly-in, fly-out” workers;
- Individuals will be required to substantiate their actual expenditure on accommodation and food beyond a statutory amount;
- These changes will apply from 1 July 2012, and a consultation paper has been released.
- This will affect the 457 visa holders in their net pay. From the beginning of July 2012 they will be paying tax on the total income they earn instead of just the income minus the LAFHA component. This will have a huge impact with them, receiving upwards of $1000 less net into their pocket per month.
But living locally means 457 visa holders who are no longer entitled to LAFHA can still be eligible for tax benefits under local conditions – via Salary Packaging/sacrifice.
Organisations should look at salary packaging/sacrifice as a way of rewarding their employees with nil or minimum cost to them. Organisations who are looking to give their employees the options of salary packaging/sacrifice should discuss this with their accountant or a company which specialises in salary packaging/sacrifice.
Individual employees should ask how they can look at salary packaging/sacrifice to help with their monthly cash flow. They should consider the salary packaging/sacrifice options available to them. They will need to speak with their employer to determine what they are able to offer them. They may also want to discuss their options with a company who specialise in salary packaging/sacrifice.
Pendragon has been involved in salary packaging/sacrifice for over 15 years and it still amazes them how little people know about salary packaging/sacrifice, which is unusual considering how at the end of each tax year employees race to submit their end of year lodgement claim.
“Very few realise that a large portion of this cash flow may be eligible to claim throughout the year with the correct salary structuring procedure” –Pendragon.
Pendragon is a people management company that acts with wisdom and integrity to provide ethical and innovative solutions, in order to gain the most of what individuals earn today in order to increase their net wealth for tomorrow. For further information please contact Gemma Fowler on 02 9407 8700 or email [email protected]