Sunday 11 December 2011 - End of LAFHA for 457 visa holders?
Lately, expats are having discussions about the loss of the tax benefit called "Living Away From Home" allowance. This particular benefit is similar to a tax deduction based on your rent, food consumption and family structure (i:e single, married, with x children...). This benefit currrently applies to foreigners who had to leave their country and come to Australia for work, in addition to locals moving interstate. For a single person earning 60kAUD, it can be something like $1,000 per month, for example.
Now the big fuss is that the current Australian government decided to do some changes to obtain a surplus budget by 2012-13, and one of the decisions made was to restrict this benefit to people maintaining a place in Australia only. People with a house overseas would excluded from this scheme, from July 2012 onwards.
So it means that for most expats under a long term business working visa (457), it is gonna be a (big) loss, as it can be one of the most significant salary incentives. Once this benefit is lost, some mention they may reconsider relocating outside of Australia to obtain the same (or more) level of salaries.
Personally I don't think it is gonna make fly out that many expats :
1/ Most of the expats are not aware of this benefit until they come to Australia or until being told by someone who already benefit from it.
2/ Given the economic situation, some expats would still accept a work visa and a job without LAFHA as long as the salary is in the market range (which can be often higher than in Europe)
3/ Not all companies allow this benefit since it is the company's decision. You cannot claim LAFHA on your own as an individual. So some expats are out of the question.
4/ It would possibly offset salaries, as employees could be more encouraged to look for another better paid job.
5/ It could also encourage people to apply sooner for permanent residency as expats tend to wait for the end of the LAFHA scheme (4 years max) before applying... Which give them more freedom to apply for other jobs.