The Living Away from Home Allowance is one of the most popular searched terms for workers on the 457 Visa.
LAFHA may cease to be available to foreign workers from July 2012
See: LAFHA to be abolished
This tax benefit can be very advantageous to certain groups of Temporary Visa holders, and can make up for some of the disadvantages of that Visa class.
What is a living away from home allowance fringe benefit?
A living away from home allowance is an allowance the employer pays to an employee to compensate for additional expenses incurred, and any disadvantages suffered, because the employee is required to live away from their usual place of residence in order to perform their employment-related duties.
The term ‘additional expenses’ does not include expenses the employee would be entitled to claim as an income tax deduction.
Examples of employees on appointments of finite duration who will generally be living away from their usual place of residence are foreign nationals employed in Australia (expatriate employees).
The employee would be regarded as living away from the usual place of residence provided that they intend to return there at the end of the term of the transfer.
An employee is regarded as living away from their usual place of residence if they could have continued to live at the former place if they did not have to work temporarily in a different locality.
The residence does not have to be the employee’s permanent place of residence.
Employees who move to a new locality with an intention to return to their old locality at the end of the appointment would generally be treated as living away from their usual place of residence.
A 457 Visa holder is normally allowed to claim this allowance from the Employer, and it is the Employer who has to handle all the paperwork.
You do need to complete a declaration stating what your Usual Place of Residence is for each period, and an example of this is a PDF file located at:
Financial Benefits ?
The financial benefits vary depending on each appointment, and on how much each employer decides, and is allowed by the Tax Office, to allocate as the Tax Free payment towards living expenses.
I have seen figures where about $1,000 per month is paid Tax Free by the employer to cover allowable living costs. This will normally be deducted from your agreed total salary package.
This figure could be more, or even less, depending on individual circumstances.
eg: $100,000 per year normal salary would attract Tax/Medicare of $27,500 per year (2008/2009 rates), leaving you with $72,500 per year net.
With $1,000 per month set as LAFHA, the gross salary would become $88,000 with Tax/Medicare of $22,520 per year (2008/2009 rates), leaving you with $77,480 per year net, after adding back the LAFHA paid to you.
ie: Almost $5,000 per year better off.
How much is a reasonable figure for the Food component in a LAFHA claim
The 2008-2009 Weekly food component
figures were shown at the Australian Tax Office at www.law.ato.gov.au, which show that for the year ended 31 March 2008, (The FBT Tax Year period), the reasonable food component for expatriate employees living away from home was:
$206 per week for the first adult, $330 for two Adults, $370 for two adults and two children. Adults are classed as 12 years of age or older, for the full year.
HOWEVER, these figures need to be reduced by an amount that you would normally expect to pay for food at home. In 2007 this was $42 pw per adult and $21 per week per child, and does not appear to have changed in subsequent years.
The Weekly Reasonable Food Component of a Living Away from Home Allowance (LAFHA) have been:
|Household||2011 – 2012||2010 – 2011||2009 – 2010|
|One adult and one child||$301||$296||$286|
|Two adults and one or two children||$419||$412||$397|
|Two adults and three children||$488||$480||$463|
|Three adults and one child||$488||$480||$463|
|Three adults and two children||$558||$549||$529|
LAFHA Accommodation component
There are no strict guidelines concerning how the amount of reasonable accommodation costs should be calculated, however some figures that I have seen are:
Less than Six Months $700 pw (reasonable accommodation)
More than Six Months $350 pw (reasonable accommodation)
Based on the LAFHA period, and a QLD Government department at: www.frp.qut.edu.au
Applying for Permanent Residence Visa
Based on the Australian Tax Office (ATO) statement that a living away from home allowance (LAFHA) is for people who intend to return to their usual place of residence, it is logical that the LAFHA is no longer tax free from the date an application to become a Permanent Resident is made.
Refunding the LAFHA benefits
There are cases where people have claimed the LAFHA, but then the ATO do not allow the claim.
When this happens, any benefit must be repaid. I have read that changes such as selling their former home can trigger this event.
To be eligible for the LAFHA you just need to live somewhere else, and have an intention to return back to that place of abode, after the work has finished.
If an employer is looking to employ you long-term, ie: you advise that it is your intention to work with them for many years, even after your 4 year temp visa expires, then I would understand that an employer may be reluctant to effectively lie to the ATO about the intentions for the job.
But if the employer is aware that you are only with them for up to 4 years, then I see no reason why the employer would not assist with the LAFHA application, other than the paperwork involved, and maybe the Fringe Benefits Tax complications that they may have concerns about.
Hi, New law relating to LAFHA…… My employer theel me new law’s regarding lafha, are as follow, will have frienge benefit tax applied to anything over $205.00, can you please confirm if this is the case, and , what are the new law’s regarding the Lafha…….. Regards Denis.
There are major changes to LAFHA, more information at: http://www.britzinoz.com/lafha-living-away-from-home-allowance-to-be-abolished
I am on business sponsorship visa and have been living in australia for 1.5years. I intend to return home. how do i go about applying for a LAFHA?
Thanks katy cartwright
You have to ask your employer to make the application to the tax office, and have the employer calculate the revised tax, and pay you the allowances instead of salary.
Many employers would not want to do this with backdating anything.
How can I find out if I ever received LAFHA,
I have been on 457 for last 8 years and only came to know about this today.
I would assume that you would know if you HAD received it.
I came to Australia on a 457 visa in July 2010. My employer is giving me LAFHA benefit. But in Aug/2011 I applied for PR but never came in mind to inform the employer. Now I might get my PR in April/2012 and just came to understand that I should have informed the employer. Its 7 months and I doubt I can make a payment of around 7k AUD with only two more month of service left with employer. I am in a big mess and need your advise. I am thinking of following options:
a. Inform employer about it which might end up loosing my next two months pay
b. Inform ATO after getting PR about this
Is it fine if I inform ATO reg this and request for a monthly repayment of tax amount without informing the employer?
I have just arrived from the UK on a 457 and own no home in the UK or Australia. Am I right in understanding that from July 2012 as it stands I will now not be able to claim LAFHA?
That is the way the legislation looks to be.
You need a home in Australia, that you are living away from, to get the Living away from Home Tax break.
Any news on if the Goverment will go ahead with plans to take away tax exempt LAFHA for 457 visas workers who don’t maintain a second hom ein Australia?
The main effect of this change, that is still scheduled to come in to force in July 2012, is:
This does appear to have a massive impact for many temporary visa holders, who have been able to use the tax system to help pay for their main accommodation costs.
Two other points are:
I have a 457 Long Stay Visa and a property in the UK being rented out.In my contract of employment with the company it states that LAFHA will be paid for the 1st 6 month period.They have paid it for 10 months and then ceased it in January 2012.
My employment terms have not changed.
Should I still be recieving LAFHA ? irrespective of what it states in my contract of employment with my employer.
Could you confirm ABC DIAMOND
From what I know about this, the LAFHA is payable at the discretion of each employer. If the contract states you get it for 6 months, then that is all you should have received. They appear to have forgotten to cancel it.
No one but the employer is able decide who gets LAFHA.
I get LAHFA at the moment but notice my super payment is only 9% of the reduced taxable income, is this right?
That is correct. Your income is made up of your salary + your LAFHA. The Super is payable only on Salary, not on allowances. Some employers may pay on the combined figure, but the law states that it only has to be paid on salary and wages.
Guide For Employers:
The minimum super you must pay is 9% of each eligible employee’s ‘ordinary time earnings’ – basically, 9% of the amount they earn for their ordinary hours of work.
Do the non-resident tax rates apply if you are paid a LAFHA whilst on a 457 visa? It would seem at odds that you are able to claim LAFHA whilst claiming to be a resident of Australia for tax purposes. There is a differenc of $6000 on the first $37,000 of income between the resident and non-resident rates.
Normal resident tax rates apply on a 457 Visa. The tax resident rule is at: http://www.ato.gov.au/individuals/content.aspx?doc=/content/36255.htm
Is it possible to claim anything back from the ATO retrospectively?
I came to Australia in 2005 on a 457 retaining my home in the UK where my wife was living until joining me six months later. I was working for a company who sold out to another company, which then forced a move from the Gold Coast to Dubbo. I subsequently found another 457 sponsor and moved back to the Gold Coast, later I applied for and was granted PR. The original 457 sponsor no longer exists and I don’t work for the second sponsor anymore.
Is there anything I can claim against my tax returns for those periods when I would have been eligible if I had know about the allowances?
I am pretty sure the answer is: No chance.
The LAFHA tax exemption is actually claimed by the employer, and not by the Employee. Therefore you cannot make a claim in YOUR tax return.
Also this allowance was intended for people who intended to return home after the Temp visa expired, an intention to stay as PR would have nullified this.
Many people have obtained LAFHA and then gone for PR, and this may well be one of the reasons that LAFHA for foreign workers (457 visa holders) is now being abolished from next year.
I’ve just started It contract last week and I’ll be away from my home (NSW). I’ll be living in Perth for the next 6-12 months… somehow the rental properties are far more expensive here in Perth. Average good apartment (2br) would set me around $450-$500 per week. Is this too excessive? as per your article one can only claim up to $350 per week. Also, I’m confused as to how LAFHA gets claimed\calculated? Do we deduct weekly allowed LAFHA from the gross pay (before deducting 9% compulsory super)? or do you have any example on these calculations? I really need this to figure out up to what sort of rental properties should I look for.
Thanks in advance.
That $350 pw mentioned relates to one employer, as an example. Each employer can however decide the figures for themselves.
The Queensland University of Technology for example quote these figures:
For the FBT year commencing 1 April 2011, the maximum amount (per week) of LAFHA that can be paid for one adult is as follows:
Less than Six Months: $233 (food) – $42 (statutory allowance) + $700 (reasonable accommodation) = $891
More than Six Months: $233 (food) – $42 (statutory allowance) + $350 (reasonable accommodation) = $541
If the average rents in your area are higher, then I would expect the employer to be able to allow a higher figure. The important aspect is that whatever figure is chosen should be acceptable to the ATO. They can always refuse it later, if it is too high, and back tax could become payable.
Your employer will deduct the LAFHA from salary, and pay it as an allowance, eg:
$2000 per week salary, no LAFHA.
You get paid $2,000 and tax is deducted from that, and you get 9% Super on the salary of $2,000
$2000 per week salary, with $700 LAFHA as part of that.
You get paid $1,300 and tax is deducted from that, and you get 9% Super on the salary of $1,300
Some employers will pay the 9% on the $2,000, it is up to them, but by law, they only need to pay 9% on the $1,300.
I am on a 457 Visa an do get LAFHA (food + accommodation).
The accommodation component is 200$ pw. But I pay 400$ pw on my rent. Can I claim for all of it or is it above the limits?
The rules do state:
The exempt accommodation component of an LAFHA is the amount you pay for additional accommodation expenses the employee could reasonably be expected to incur at the alternate location.
Where the allowance paid includes an amount for accommodation which is not reasonable, that part of the allowance will be included in the taxable value of the LAFHA.
There are no strict guidelines concerning how the amount of reasonable accommodation costs should be calculated.
Factors you could take into account when determining the accommodation costs include:
whether the employee will be accompanied by family members
the position held by the employee in the workplace
the location where the employee will be living
whether or not the accommodation will be furnished
the employee’s current living standards.
Hi, I have been working for my employer for 6months under the visa 457. I have just found out about LAFHA and talked to them about it.
They said they will try to do it retroactive, but I think you cant.
Could you advice if it is possible to claim it retroactively?
Thanks a lot!
If the employer wishes to alter the wage records, to split your income between salary and allowances, and it is in the same tax year, then it may be possible. But it will be down to the employer, and the amount of work they may need to do this.
I am in melbourne on 457 Visa.
In my offer letter/agreement “Leaving from Home Allowance” is mentioned as “None”.
Is there any way I can take benefit of this allowance. ?
What are the Different way I can save Tax in Australia?
This LAFHA is totally down to the employer being prepared to offer it. If they do not, then there are no other options that I can see.
Other ways to save tax are varied, and you will need to see an Australian Registered Tax Agent, unless you have sufficient experience with the Australian Tax system yourself. However this can take years to work out all the best options.
I have moved to Melbourne with my family couple of months ago as Permanent Resident. Currently we do have intention to back to our usual place of living after 3 – 4 years. Currently, I am doing contract job and my Tax company has suggested me to apply LAFHA.
Now what if we change our mind after 3 years and decided to live here permanently?
One of the most common things about LAFHA is that an application for PR is considered substantial evidence of an intention not to return to your main residence overseas, and would normally make a person NON eligible for LAFHA.
Most people who arrive for 3-4 years temp work do so on a 457 visa or similar, a much easier, cheaper and faster Visa route. If you have a viable explanation for choosing a PR visa for short term work then the ATO may allow LAFHA. However, my guess would be that if you then revert back to being permanent they may revisit the tax allowances you have received. As well as repaying the tax, Penalties and Interest MAY apply if they deemed it appropriate.
I am moving interstate and will be working away from home. I want to know how to apply for LAFHA. Do I have to complete any forms to claim LAFHA.
My LAFHA payment effectively reduces my income from $35 to $30 an hour, with the difference made up as the LAFHA, however, when I do overtime, this is also paid at $30 p/h without any corresponding increase in LAFHA payment which effectively wipes out any benefit. Is this normal practise or can I insist my employer pays overtime at the full (non-LAFHA deducted) hourly rate?
I am currently working in Australia and receiving LAFHA – I have a home in the UK but want to know if I can purchase an investment property in a different state in Australia without affecting my LAFHA – is this possible?
I just recently arrived melbourne on 457 visa and i m here intend to live upto 7-8 mnths.. I have declared LAFHA and submitted to my employer in which i mentioned 500$ per mnth as my Rental expenses. I was asked to not to fill for Fodd expenses as theyw ould fill those detaisl on behalf of me. My gross pay for 1mnth is 5300 AUD.
I have received my first paycheck in which i didn’t find anything with LAFHA component as such. Also i could see that 1220$ was deducted for Tax Purpose. I was so confused and suspecting that they didnt allocate anything to me under LAFHA for that pay check. My question is.. Normally how much would be deducted as tax for a gross salary of 5300$ per mnth without considering LAFHA and with considering LAFHA. Also please let me know if i would be able to get refund of any Tax amount that is/will be deducted as i will leave Australia in next six mnths..I would be glad if you can clear my doubts 🙂
My calculations, without LAFHA, show:
$5,300.00 Gross Salary
It would appear that LAFHA has not yet been authorised.
If you claim $500 pm as LAFHA your pay should be:
$4,800.00 Gross Salary
$ 941.50 Deductions
+ the $500 Allowance
I have moved to Australia on a partner visa (subclass 100) with my husband who is Australian (I am British). Our intention is to return to the UK at some point in the future. Are you able to confirm if I am eligible for LAFHA on this type of visa?
The subclass 100 partner visa is a Permanent Visa, therefore unlikely to be able to claim LAFHA on the basis of returning to the UK.
Thank you very much in advance for sharing your wisdom on the subject.
An Australian firm has offered my husband a temporary relocation employment package for 2 years (with a 457 visa).
They have used LAFHA as way to “sweeten” the package, but we want to understand it more fully. Our permanent residence is in the U.S. and we would try to either sell or lease our home if we relocate. The employer is willing to claim $1000/wk.
My specific questions are related to the housing portion of LAHFA:
1) If we legitimately spend let’s say $2200/wk on a lease (and it is comparable to our lifestyle here in the U.S) can we ask them to claim a higher LAFHA?
2) If we lease our home in the U.S. whilst in Australia, does that factor into the amount we can claim on LAFHA?
3) If we sell our home in the U.S. will that have any impact?
Looking forward to your response!!
I’m an Australian citizen and have been living & working abroad for last 10 years. My husband a Canadian, his company would want move him to work in Australia under a contract term and he will be on 457 visa. We are intended to move back to Canada after the contract expires. I do not intend to work during my stay in Australia. Is my husband eligible for LAFHA? Thanks
I’m here in Austrlia just joining for 457 working visa. my employment is permanent and they relocate my family and furniture also to here.
Am i eligible for LAFHA scheme?
Is it your intention to return home after your temporary employment in Australia ? Or do you plan to try to stay permanently in Australia.
Sorry for late reply. yes i intent to come back to my home country after 5-7 years working in here.
I am here through a 457 visa via my partner, so I have full work and study rights. He recieves LAFHA through his company which sponsored us to come over. Now that I have been offered an employement position with another employer, can I also apply for LAFHA? Or can only one of you on the visa apply for it?
Check out this ATO link, http://www.ato.gov.au/…/20 I think it should cover the answer to your question.
It relates to “LAFHA payments to husband and wife”.
However, you need to be careful that you do not double claim, as this could create problems for you with the Tax office.
eg: The The 2011-2012 Weekly food component figures are:
$233 One adult
$373 Two adults
If you both claim the $373, then you could be classed as defrauding the Government.
If you each claimed the $233, you would probably be classed as claiming as single people, not a couple, and again may give rise to problems. The correct claim would be $186.50 each, ie: $373 for both of you.
The ATO has the ability to reverse any incorrect claim, and cause a big tax bill for someone.
I am on 457 Visa…I had an intention to apply PR and therefore not be eligible for LAFHA. Eventually after 8 months being here I have changed my intention. In this scenario will I able to apply for LAFHA since I have intention of going back home after my vise expiry? Will there be any implication with ATO?
That is an interesting one. I think you would need to get it clarified. If you had actually put in an application for PR, then you would be treated the same as any of us who have PR. But if you hadn’t applied, then who knows if has intended to apply ?
I would try it, and see what the ATO say.
I am currently on a Working Holiday Visa claiming LAFHA and am shortly going to be submitting a Temporary Partner Visa (subclass 820) application. The Immigration Department also take this as an application for a Permanent Partner Visa which is generally processed and given 2 years after the date the temporary Application is granted. My partner is Australian hence the application for a partner visa but I still rent my flat out in the UK and am applying for a partner visa to allow me to extend my stay in Australia. We have not yet decided whether we will remain in Australia or intend to return to the UK. I have previously been advised I should be able to claim LAFHA whilst my visa status is temporary but I would be grateful for your thoughts.
Can I ask if it was an official statement that you should be able to claim LAFHA whilst the visa status is temporary ?
There are actually many people on Temp visa’s waiting for PR that are not able to claim LAFHA, purely because they have applied for PR.
Immigration normally work on the basis that as soon as you apply for a PR status, then LAFHA stops. Application for PR is their indication of you becoming permanent. Even if you say that you may return, they will likely say that many PR’s still consider returning, but the option for LAFHA for them is lost on PR application.
As a partner of an Australian then I would expect the ATO to say that your permanent residence is the same as his. And you end up in the same position as all of us who have Australian partners.
You can try for it, but I would consider that they may refuse it, and request any benefit to be repaid.
I moved to Australia on a working holiday visa. Since then I have been sponsored on a 457 Visa.I was unemployed for two months when I got here first. I didn’t set up Lafha when I started employment. I do intend to return home in 2014. Am I still eligible?
On the basis that you were already here before you were sponsored, my gut feeling is that you are as eligible as anyone else that did not HAVE to move here for that job. The ATO reply is likely to be that you came here on a WHV which is not eligible for LAFHA.
This section of ATO Taxation Determination TD 2000/D5 Inspector-General of Taxation, appeared to cover your situation.
A foreign national who enters Australia on a WHM visa is unable, in view of the conditions of that visa, to demonstrate a causal connection between any additional expenses incurred whilst living in Australia and a requirement to live away from their usual residence overseas to undertake that employment.
once the employee/contractor starts to make their own decisions regarding lifestyle and employment changes, LAFHA ceases to be payable. This covers your change from WHV to an alternative Visa. Unless of course you had returned home inbetween the WHV and the 457.
An ATO legal page on LAFHA on working holiday visa.
There are independent websites that contradict this, but please be aware of this ATO statement: Overpayments of LAFHA benefit found during an ATO audit will have to be paid back to the ATO by the contractor/employee in all cases, without exception. This indicates that even if you claim from an employer, it may be reversed later, with the tax benefits being repayable to the ATO, by YOU.
I used to be on 457 visa in 2009 and work for my employer her in Australia for a one year contract. After 2009, they renewed my contract for 2010 and up till 2011. They did not apply any LAFHA to me since then. Can I bring this up to my employer and re-adjust my salary? I am now a PR and applied for it end of 2009 and I was granted in 2011. Is there a possibility that my employer can claim LAFHA for me between 2009 till my PR has been approved? And can I still get my money back in application of the law and benefits?
Your eligibility for LAFHA technically ended on the day that you decided to apply for PR. It definitely ended on the day that you APPLIED for PR.
It would appear that your employer was correct to discontinue any LAFHA benefit.
Hi ABC Diamond,
I think I wrongly said the words – I have to rephrase it. My Australian employer had never ever given me any LAFHA benefits from the day they contracted me. It is only just now I LEARNED ABOUT LAFHA when I am already a PR. Is there a way I can claim this back from my employer even just from the day I arrived in Australia up till I applied for my PR? Can the ATO refund this back to them?
I would feel that there is very little chance of this being able to be done.
The employer would need to alter their payroll records for that year, having to re-allocate your pay between wages and allowances, and then notify the changes the tax office, and ask if that was acceptable. This would alter their FBT return, and their annual accounts and tax returns.
You would then need to ask the ATO to revise your tax return for that year, and confirm to them that the allowances to be incorporated in LAFHA, were actually intended from the start.
This procedure would be complex, and involve your employer, and their accountants, in amending annual payroll and financial returns, and with yourself and the Tax office in amending your own previous year annual tax return.
I did find this information specified on the ATO legal website about LAFHA, as one of the conditions:
A pre-condition for the application of section 23, sub-section 47(5) and section 63 in the manner described above is that the employee gives to the employer a declaration of the kind specified in paragraph 32 by the date of lodgment of the employer’s annual fringe benefits tax return
I feel that this may preclude you from backdating in this instance, although the technicalities of all those sections and subsections in the ATO law, is never clear to us non-legal people.
However, I feel there is sufficient for the ATO to disallow any claim.
If the amount involved is substantial, you could consider the services of a LAFHA specialist, at a cost to you, to investigate this on your behalf.
I really appreciate your reply – thank you so very much. The amount to me is quite substantial. I am calculating roughly 10k refund if this will materialise. It’s just sooo unfair that my employer wasn’t aware of this in the first place 🙁
I have LAFHA and recieve a food allowance of $200 per week. My employers are now deducting from this and expenses incurred whilst travelling for work around australia. Ie any expenses I incurr for food whilst working in other parts of Australia are not being refunded to me until they exceed my $200 per week. Is this correct?
I am trying to get my head around this. I think you may need to get professional advice on this.
Do they actually give you this extra $200pw, as well as you getting the Tax Office LAFHA tax benefits?
If so, then your first $200 worth of food expenditure is being paid to you in advance, with anything above $200 being paid later.
I have just arrived on a 457 visa. My post is permanent (subject to a six month probation).
I own my home in the UK which I am renting out.
Can I claim LAFHA whilst I’m on a 457 visa. It is my intention to move back to the UK to my home. However, I was wondering if the mere act of holding a 457 visa means that I can claim LAFHA?
I don’t believe its’ a wise move to sell my home in the UK unless I had PR status.
Any advice would be welcomed.
Your situation is a very common situation for many who do claim the LAFHA. So yes, you should discuss this with your employer as soon as you can.
I have a question. I’m living away from home and eligible for LAFHA. My company moved me to Melbourne in Dec-2010. I filled the LAFHA Forms and submitted to my company in Apr-2011. I noticed increase in my take home salary of about $350/month. Does it mean that I have missed the LAFHA benefit from Dec-10 to Mar-11?
Generally LAFHA cannot be backdated, as that means altering previous payroll data to reduce the salary to a lower level, so that the LAFHA payment becomes a genuine Allowance rather than a salary sacrifice.
You would need to check with the employer. The employer would then have to be prepared to alter those previous payrolls. Something that may be a bit of excess work.
A page on the Peoplebank website (one of Australia’s largest IT recruitment companies) states:
What if I do not intend to leave Australia at the end of the 457 visa? I don’t have to commit to saying that I will be leaving and then get penalised if I decide to stay and apply for PR?
In general, LAFHA is only paid to those people who INTEND to return to their normal living place after the period of work is completed.
Using that definition, it would not be “legally” allowable in the first place to someone who does not intend to return. However, in most cases the tax free status is only removed after an application for PR is submitted.
This is a commonly used paragraph in that respect:
Only wanna admit that this is very helpful , Thanks for taking your time to write this.