LAFHA
PayMe is Australia’s premier provider of Living Away From Home Allowance (LAFHA). We can determine if you are eligible for LAFHA, provide you with a sample payslip and advise your employer on how to manage LAFHA on their pay system and file the key documents that are required each year.
What is LAFHA?
LAFHA is an allowance, approved by the Australian Taxation Office, which reduces your taxable income to assist with food, rent and other removal costs when you are working away from home. Your employer does not need to increase your pay, and if paid correctly your employer is not required to pay Fringe Benefits Tax.
LAFHA is paid in two main components, the Food Component and the Accommodation Component – however there are also additional travel, removal and storage of household effects and connection of utilities components.
To find out how much you could be receiving with LAFHA, use our LAFHA calculator.
Who is eligible?
- All employees working in Australia;
- Contractors working in Australia;
- Visa holders working in Australia (such as 457 Visa, 417 Working Holiday Visa and other Visa classes where the Visa holder was required to apply for permanent residency but can also prove their intent to return home);
- New Zealand citizens working in Australia temporarily on a fixed-term employment contract.
- Australians working overseas and being taxed in Australia.
What are the eligibility considerations?
- You must be living away from home for work-related reasons;
- The period you will be away from home is greater than 21 days;
- Your employment contract or temporary move, must be of fixed-term defined by date or completion of work;
- At the time of applying for LAFHA and while you are being paid LAFHA, you must intend to return home;
- You must be formally assessed as complying with LAFHA legislation, rulings and precedents.
What else can be claimed under LAFHA?
- Travel expenses from your permanent residence to your new (temporary) location. This includes fuel, transport, meal and accommodation costs based on receipts.
- Temporary accommodation at the permanent location up to 21 days.
- Temporary accommodation at new location limited to an occupancy period that begins seven days before you start work at the new location and ends when you could reasonably be expected to occupy long-term accommodation by lease; this is four weeks.
- Connection or reconnection of gas, electricity and telephone services to your new home so long as you had these connected at your permanent home.
- The costs of removal, storage, packing, unpacking and insurance of household effects, including pets.
How PayMe Can Assist You?
LAFHA Questionnaire
Please contact PayMe by email enquiry. We will email you a LAFHA Questionnaire so we can conduct a free LAFHA assessment of your situation and allow us to progress to a formal assessment should you be eligible for LAFHA.
Free LAFHA Assessment
Our LAFHA consultants will conduct a free LAFHA assessment on the information contained within your LAFHA Questionnaire, and this will tell us if you are eligible for LAFHA. We will then contact you by telephone to confirm your eligibility. If you are not eligible we will advise you. Those that are eligible for LAFHA can engage PayMe to prepare a Formal LAFHA Assessment.
Formal LAFHA Assessment
We have one flat fee of $440 Goods and Services Tax inclusive for the Formal LAFHA Assessment. We request this fee in advance by Visa or MasterCard and it is a sound investment when you consider that most people increase their cash in hand by between $10,000 and $15,000 per year. There are no ongoing charges and you normally recoup this fee within one to two LAFHA weekly pays. The fee is also tax deductible.
This is the document to use to do your best to convince your employer that LAFHA is a legal allowance that can be paid to you. It is a document that presents an issue and the solution to that issue; as opposed to providing your employer with a problem to research; a problem that few payroll staff, CFOs and accountants actually know about.
The Formal LAFHA Assessment is a comprehensive document that:
- legitimately documents your eligibility for LAFHA against the LAFHA legislation and precedents,
- advises you how much LAFHA you may claim per week,
- provides you with a LAFHA payslip that indicates what your payslip should look like and the additional cash in hand you can expect when you are paid LAFHA. You can use this payslip to quality assure your employer’s payroll system.
- provides your employer with the key LAFHA references so they know LAFHA is a legal allowance that does not require any increase in gross salary and will not attract Fringe Benefits Tax,
- states the documents to file and processes to implement to ensure that LAFHA is paid correctly and that Fringe Benefits Tax is not payable by your employer,
- provides ongoing free emails on changes to LAFHA legislation and reminders to lodge your LAFHA declaration each Fringe Benefits Tax year.
Tel: 1800 082 006
One Flat Fee
Our fee for the Formal LAFHA Assessment is a one off cost of $440 (Goods and Services Tax Inclusive). This is usually recouped by your second week of LAFHA payments, so it is a sound investment when you consider that most people increase their cash in hand by between $10,000 and $15,000 per year. There are no ongoing charges and we do not ask you to engage us to conduct a Formal LAFHA Assessment unless you are eligible for LAFHA.
LAFHA - Q&A
Does LAFHA attract Fringe Benefits Tax?
No. LAFHA is an allowance that is defined and managed under the Fringe Benefits Tax (FBT) legislation – when paid correctly, LAFHA does not attract FBT.
Is there a requirement to increase an employee’s pay?
No. Whilst LAFHA is referred to as an ‘allowance’ it should not be considered as additional pay. LAFHA works similarly to a salary sacrifice, in that it lowers an employee’s taxable income.
How can I determine if an employee is eligible?
This is where PayMe comes in – we conduct a LAFHA Assessment in order to determine which employees qualify and provide information regarding:
- Your obligation as the employer,
- What documents are required to be filed initially and then yearly to ensure that no FBT is payable.
- How to pay LAFHA and manage an employee’s changing circumstances,
- Satisfy your accountant or chief financial officer that no FBT is payable.
What type of situation allows an employee to be eligible for LAFHA?
The following situations are those where LAFHA is likely to be payable:
- If you engage a foreign citizen who is a Visa holder;
- If you engage an employee who lives away from the work area where they are required (for example, an employee residing in Kalgoorlie is required for a fixed-time in Sydney);
- If you require your employee to move overseas and remain taxed as an Australian citizen for the term of the move;
- If you engage a contractor to conduct work for your company, which requires them to reside in another town or city for a fixed-time or until the work is complete.
Can I backdate LAFHA?
No. LAFHA can only be paid once you are determined eligible and your employer agrees to pay it.
Can I claim LAFHA in my tax return?
No. It can only be paid by your employer who must first approve the payment of the allowance.
Can LAFHA be included as Guaranteed Earnings with regard to the Temporary Skilled Migration Income Threshold
Yes. The Department of Immigration and Citizenship has advised that LAFHA benefits are now included as part of guaranteed earnings for 457 Visa holders in relation to the Temporary Skilled Migration Income Threshold (formally known as the Minimum Salary Level). Therefore, whereas in the past may 457 Visa holders on market rate salaries of below $50,000 could not take advantage of LAFHA, they can now because LAFHA contributes to market rate salaries.
Tel: 1800 082 006