Treasury launches fortnight of consultation on LAFHA legislation

The treasury has set a deadline of the Tuesday after next for comments on its legislation to end  the Living Away From Home Allowance for most workers.

The axing of LAFHA is of particular relevance to agencies and the media industry because of the high proportion of overseas staff it employs. Knock-on effects include increased mandatory super contributions from employers and a significant reduction in take home pay for those affected.

The plan was confirmed in last week’s Budget although there was confusion over the possibility of a two year transition period. Today’s draft spells out that this will not be available for anyone with homes overseas.

The Treasury has released an explanation of its plans, along with a draft of the new legislation. Anyone wishing to comment has until Tuesday May 29. Details of how to do so are available here.

Comments


  1. Gary Mason
    15 May 12
    7:24 pm

  2. Well there you go. LAFHA GONE for non Australian residents. Not sure why the Australians get a 2 year reprieve and I (UK) don’t. Maybe it’s due to the fact that those passing this draft budget are claiming LAFHA themselves?

    Think they’re cutting their noses off here. Let the exodus begin!

  3. America
    15 May 12
    10:26 pm

  4. We are out of here!

  5. Alan Dowdall
    15 May 12
    11:09 pm

  6. This has been a great perk for me over the past 2.5 years but I know families who have emigrated and as going to lose out on thousands each Monday which has been used to cover the cost of education and healthcare of which we are not entitled to as temp residents.

    An extremely foolish move by the government that is going to cost smaller businesses in the long run with the cost of hiring staff inevitably going to rise to an unsustainable level due to demand.

    The benefit was abused by a lot but unfortunately needed by many who will genuinely suffer as a result.

    Don’t get me started on the blanket 35% tax rate either … There is some tough times ahead

  7. Jason Ross
    16 May 12
    12:28 am

  8. Hmmm, I just read the Explanatory Notes – seems to imply that 457’s will get the reprieve…? (http://bit.ly/JsTa0G page 5):

    “Transitional rules also apply to temporary residents who are maintaining a home in Australia and have employment arrangements for living-awayfrom-home allowances and benefits in place prior to 8 May 2012.”

  9. Sweden
    16 May 12
    10:17 am

  10. I am out of here too. Not because I cannot afford to pay taxes on the lafha, but because I do not trust your government anymore. I am shocked that this kind of change can be introduced on such a short notice without transitional rules. What’s next? How can I plan my future in Australia when everything can change tomorrow. I hope you realize what an impact this will have on your real estate market, when so many 457 visa holders will leave the country during the coming 12 months.

  11. Canada
    16 May 12
    10:37 am

  12. @ Jason R.
    I was under the impression that anyone on a 457 is unable to maintain a home (i.e. ownership) in Australia of a residence in Australia.
    Therefore, by default, wouldn’t all employees on the 457 be ineligible for the transitional period and lose LAFHA on July 1?

  13. Jason Ross
    16 May 12
    10:41 am

  14. @Canada That depends on the definition of maintain. Yet another piece of undefined messaging from the Aus Gov!! If it were up to me, maintaining a residence would equal renting one. Wishful thinking maybe!!!?

  15. Citizen Smith
    16 May 12
    11:16 am

  16. There are things that you can do to challenge this legislation, The draft is yet to be approved as legistlation and can be challenged in the consultation which is now reopened and by individual MPs. Please visit http://www.facebook.com/yourehavingalafha to see how you can help to spread the word to challenge these LAFHA reforms.

  17. POM
    16 May 12
    11:39 am

  18. Is it true that Employers have to help compensate this loss?

  19. Lifer
    16 May 12
    12:18 pm

  20. I think you should all make some placards, get organised and march on parliament!

    If you truly feel that it is going to hurt you that much, if you truly think that without a few people working in the advertising industry (because you will be going home) the country will go to pot, then please, please, please – take action and don’t just write anonymous posts…

    I am Australian and after hearing all of your comments and on the previous threads I am getting really worried!

    You should lobby your Australian colleagues and make them aware of the enormous problems that will occur once you guys lose your LAFHA.

    Heavens forbid, you might have to live in a slightly smaller house, perhaps in a slightly different suburb. You might have to cancel that Foxtel subscription. Perhaps eating out might have to be reduced to only 4 times a week. You might have to trade in the Range Rover and buy a medium sized car.

    I am keen to join in the march with you; please let us all know when and where and I will be there for sure to help save your royal standard of living…

  21. LIAM
    16 May 12
    12:44 pm

  22. is this racist to discriminate against different nationals? why isnt everyone equal…?? understand the changes but surely 457 visa holders are entitled to get accustomed to the new laws…therefore we should have the 2 year grace period!!!!!

  23. Jason Ross
    16 May 12
    12:45 pm

  24. @Lifer … Well said! Life in the ivory tower gets so boring sometimes so it’s always good to hear from one of the minions!

    Despite what you might think, there is another side to this (other than the clearly bitter perspective you have) … which has been very well outlined here: http://www.mumsgone2aus.com/20.....residents/

    If you actually had an interest in the other side of the coin, would be worthwhile reading.

  25. Emma
    16 May 12
    12:50 pm

  26. Lifer, I’m a lower medium-income foreign worker on 457 and live in a tiny apartment. I pay private healtcare, education for my kids (4500 dollars a year/child) and childcare without any benefits. I don’t have a car (can’t afford it), I live very far awar from the centre and foxtel is a luxury that I cannot afford. Now I will be paying more taxes than my Australian colleagues without the benefits they get. I will have to leave the country with my family, take my kids out of school and find work in my home country. This is a huge problem for us, so please show some respect to us that will suffer a lot from this situation.

  27. Lifer
    16 May 12
    1:08 pm

  28. @ Emma, I certainly mean you no harm and my post was the lowest form of wit, coupled with a little tongue in cheek, posted anonymously, however not to insult etc

    I guess there are genuine cases where people will truly be inconvenienced, for which I would hope they can raise their case with their employer and be remunerated accordingly. (This is where the real talent will be rewarded v the average, will have to make do.)

    Flip however to so many “geezers” in adland, who are living in luxury and literally cannot spend all of the money they are being handed, I do not pity them. The country will be better to attract skilled workers who want to live in Australia, v skilled workers who are here for the tax break.

    Good luck Emma and I am sorry if my post offended you and anyone else.

  29. Juan
    16 May 12
    2:03 pm

  30. Does this mean I should cancel the gold teeth I have ordered? Also, could anyone tell me does New Zealand have a LAFHA equivalent and how much would it cost to ship a 72inch 3d TV over?

  31. Devil's advocaat
    16 May 12
    2:05 pm

  32. What Wayne didn’t say:

    “With a recession arriving in Australia in many sectors it makes sense not to encourage foreign workers to come here to keep jobs free for Australians.”

    Oh.

    Did you just say recession?

    Don’t use the R word!

    Mining boom. Mining boom. Mining boom. Mining boom. Mining boom.

    Sorry guys, but tax perks for 457 foreigners have to be the first to go when Labour need to win votes in hard times.

    Although yes, a government that makes changes like this with a 2 week consultation only 6 weeks before they come in is not likely to be world class anytime soon.

    Also, there are some other changes to visas being made on 1 July that you might want to look up, though these are also yet to be announced.

  33. Devil's advocaat
    16 May 12
    2:06 pm

  34. Sorry, Labor.

  35. Keith
    16 May 12
    2:14 pm

  36. Has anybody thought of the poor recruiters? Those guys literally put their lifes on the line for us? It’s going to be so difficult for these guys to get us high paying jobs now.

    If the Government expect me to live over here without my Merc, my Foxtel HD and my Poker games in the Crown they are sadly mistaken. IM OUTTA HERE

  37. Emma
    16 May 12
    3:08 pm

  38. I’m currently working for a company who has recently only employed overseas workers from the UK due to the fact that they are higher trained and have experience working in a faster-paced, cut throat UK media industry.

    The contracts for the overseas workers last over 2 years, from the beginning of sponsorship to the end, with a clause saying salary will be a fixed minimum rate until completion of those two years (2 and half if you count the initial 6 month trial period on an even lower salary.)

    We MUST have a two year transition period otherwise we’re glued into contracts which will not be flexible towards this change in legislation

  39. bob
    16 May 12
    3:20 pm

  40. Greg and dave are not gonna be happy – their buinsess will diminish overnight!!

  41. Sweden
    16 May 12
    3:32 pm

  42. It is one thing to remove future tax breaks for people who have not yet arrived in Australia, but quite another to remove it, with a little more than one month notice, for people who are already here.
    I think it is comparable to your landlord increasing the rent with 50% mid-contract, which would seem inconceivable.

    And Lifer:
    – I live in an apartment (not a house) with wife and two kids.
    – I do not have foxtel.
    – I eat out once a month, max.
    – I had to sell my two cars back home with a loss, to buy a 5 year old used Japanese car here.

    And aside from that:
    – My wife is highly qualified and works in health care here. (how many Australian women with kids do that?)
    – I am here to build a subsidiary to my company back home which would easily employ at least a handful of Australians in a year or two.

    I do not count on to many Australians to show up for a march. Most of them are probably happy to get rid of us well-off foreigners. But be careful what you wish for – it is not guaranteed that the result will be what you expected.
    Quite a few of the temporary visa holders are in health care and IT and not abusing your system, and you are already in urgent need of more workers in these sectors. Good luck with that when the word gets around how your government takes care of foreign skilled workers!

  43. Mohammad Pierdi
    16 May 12
    3:35 pm

  44. 2 option should be done for the employee.

    1. Get better job in Australia
    2. Out from Australia

  45. Bean Counter
    16 May 12
    3:38 pm

  46. I am a CFO in the marketing industry and am very familiar with the LAFHA conditions of times past and the upcoming changes (which were tabled almost a year ago, for those who seem shocked that this is happening) and believe that the reduction of LAFHA is a good thing for Australian’s, who’s take home pay is currently taxed a lot more than those on the 457 visas, hence why so many people stay on the 457 visa so long rather than applying to become residents. I’ve had staff stay on 457 visas for 10 years as it was so much more beneficial to them than becoming a resident and being taxed like and Australian.

    I do think the government should give those on 457 visa’s the same access to education and health as Australian’s but those costs are often far less than the benefits that sponsored employees have been enjoying for many years.

    These changes are long overdue – you can always become a resident or return to a more challenged labour market in the UK, US etc and try your luck getting a job that pays as well there?

  47. Alan
    16 May 12
    3:44 pm

  48. @Mohammad Pierdi

    You wrote

    “2 option should be done for the employee.

    1. Get better job in Australia
    2. Out from Australia”

    2 option(s) perhaps (if you could write correctly that is)

    Learn how to use the English language correctly
    Swallow them sour grapes and contribute something positive, maybe a well worded argument why are (obviously) glad these benefits are being abolished as of the 1st of July.

    You might be successful in securing a job once everyone who can use correct grammar has left Australia.

  49. Kochie the Villain
    16 May 12
    4:00 pm

  50. @mohammed – obviously you are looking forward to skilled migrants leaving so you might have a chance at getting a job.

    1. Learn English grammar – you are in an English speaking country
    2. Lose the sour grapes.

    I for one (along with im sure every other 457 worker) will never vote for this government when I become a citizen of this beautiful country.

  51. jean cave
    16 May 12
    4:34 pm

  52. Australia is not in a recession and maybe that is because they have a lot of skilled workers gathered from allover to help keep things buoyant.
    Now that the current government has decided to tinker with the taxes , a better approach might be to express some gratitude and show a kindlier human face regarding transitional requirements.

  53. Move.A.Mountain
    16 May 12
    4:43 pm

  54. @Alan those*

  55. Aussie
    17 May 12
    12:50 am

  56. Dear all the whingers on s457 visas who are complaining about losing out on a tax perk and threatening to go the UK and predicting the impending doom of Australia.

    Firstly, on behalf of all Australians, give up the whingeing. Youre now paying tax like the rest of us. I dont get a handout and I also haveto put up with the cost of living in Sydney and have a wife and 2 kids. Youre acting like you are being disadvantaged somehow. Lets state the facts clearly: you are NOT being disadvantaged, you are now paying the SAME rate of tax as everyone else. You dont, I repeat DONT have a god given right to come to the antipodes, live in the eastern suburbs and put your kids in private school. There’s 5 million sysdneysiders who make do without LAFHA tax breaks. Join them and live within your means. 5 million people already do.

    Secondly, your predictions of the impending doom of Australia’s marketing industry are wide off the mark. You’re not that special, really. We’ll find others to do the work, trust me.

    Thirdly, youre very welcome to go back to the UK where I hear it is an employment utopia. Australia is clearly FORCING YOU OUT the door, so there’s obviously one thing you can all do – 20,000 of you can head back to London at the same time and all find high paying jobs. Easy.

    I hope the above assists you in a speedy exit.

    ps – to those Poms who arent complaining and understand the gist of what i have said above – good on ya mate, hope you become a resident and come over for a barbie next weekend..

    Kind Regards
    Aussie

  57. Alan
    17 May 12
    9:07 am

  58. @ Aussie

    Before you fire up the Barbie I suggest you get your facts right before you dive in head first and get burnt by the flames.

    Australian PR & Citizens – Salary Bracket $37,001 – $80,000
    $4,650 plus 30c for each $1 over $37,000

    Temporary Residents & WHV Holders – Salary Bracket $37,001 – $80,000
    $10,730 plus 30c for each $1 over $37,000

    So as you can see there is a major difference in the last Tax year and it will be a blanket 32.5% from the 1st of July. If you are going to go off on a rant, please back it up with more than hearsay.

    Pfft….

  59. Sam
    17 May 12
    9:49 am

  60. Dear “Aussie”,

    Get your facts right before you rant, as you will come across as poorly informed and ignorant, as you just have.

    As stated above, we do not share the same tax bracket as you guessed. We also do not qualify for medicare or free public schooling which is where LAFHA makes living in Sydney affordable.

    Alot of people will consider leaving Australia when these changes take affect. What you dont understand is that these people have been sourced from overseas due to their specialist skills and expert knowledge of industry.

    Before you comment in the future, understand the facts.

    Thanks for the offer of a barbie, but I feel you’ll be eating alone.

  61. Paddington guy
    17 May 12
    10:22 am

  62. Sorry Poms. The govenment knows you won’t go home because there are no jobs back home.

    The tax rort party’s over. Get on with your work.

  63. Sweden
    17 May 12
    10:37 am

  64. @Aussie
    We did not give ourselves a tax break – your government did, because they wanted us to come here and contribute with needed skills to your country.
    We came, we love it here, we pay your taxes and we spend our salary in Australia.
    Now your government wants to change the rules mid-game. Is that fair?

    At least give us some time to move out from our shiny beach houses, cancel our foxtel subscriptions and health insurance and move our kids from private to public schools (please note the irony). I hope that makes you feel better and proud as an Aussie. I am sorry if we have been causing you a problem during these years. It won’t happen again…

  65. A Pomme' Bloke
    17 May 12
    11:18 am

  66. @Aussie I hear you loud and clear. I am now a citizen and although I cant see myself supporting the Aussies over the Pom’s anytime soon, whinging poms drive me mad.

    So do Pom’s who don’t seem to assimilate. They come over here, hang out with other Pom’s, whinge all the time and then go home after a few years. (I swear if there wasnt Foxtel with the sport channels and Sky News they wouldn’t be here in the first place…)

    By taking LAFHA away this should be a positive move to encourage skilled immigrants who want to be here for the long term, verses the obnoxious lot who are here for the tax break. Good riddance to them I say.

    Lots of whingers are making threats, many will not follow through, a few will, hey ho the marketing industry will be fine.

    For those who are truly going to be totally inconvenienced, I would recommend putting a case forward based on the fact that you are living in Castle Hill (not the Eastern Suburbs) and cant go anymore west etc – they might evaluate your case…

  67. RW&B
    17 May 12
    11:20 am

  68. @Aussie

    We’ll be paying the same tax, yes.

    We’ll also be paying $4,500 per year per child for STATE schools when you pay NOTHING.

    We’ll also CONTINUE to be denied the childcare tax rebate.

    Most temp residents receiving LAFHA don’t mind it being abolished, they just want an EQUAL 2 years grace period to get their affairs in order, like Aussies get.

    @Bean Counter. The reforms weren’t tabled almost a year ago – they were announced in the MYEFO on 30th November, with the promise of transitional arrangements. Even IF, and it’s a huge IF, you saw that announcement as 100% confirmation that LAFHA was going 1st July, then you’d have exactly 7 months to get your affairs in order.

    Hmmmm….. I’m on a 24 month contract with relocation lock-ins, I have a 12 month lease on a MODEST family house in Adelaide, and my tenants back in the UK living in the house that I maintain (fact) are about to sign up for another 12 month contract – so I won’t have a home to go back to!!! What am I supposed to do, kick them out IN CASE the new reforms happen and I need a home to go back to, then re-rent it if they don’t????

    The Treasury are telling TELEPHONE CALLERS that employers are expected to increase salaries for an equal take-home, but the exploratory paper released by the Treasury mentions this NOWHERE. Nor have they published the response submissions from the LAST round of consultation……… Even though Government Agencies (i.e. the Treasury) are obligated to show how consultation responses have affected policy.

    It is a undeniable FACT that foreign workers in the UK (all those Aussie teachers in London, spending their weekends jumping on cheap flights to on-the-doorstep Europe) would NEVER be treated this way by the UK Government. The Press, pundits and analysists would be all over it from day one – Brits would stick up for Aussies. Shame it isn’t reciprocated here. True-Blue patriotism turns to xenophobia at the drop of a hat.

    If that is whinging, if YOU think you could live without $1000 per month with 6 weeks notice, then sue me.

    AUSTRALIANS DO NOT EVEN NEED TO SHOW THEY MAINTAIN AN AUSTRALIAN HOME UNTIL JULY 2014. I can prove to you right now that I maintain a home in the UK which my skilled job here means I live away from, but after the 1st July it won’t matter. The Treasury is admitting that Aussies are ALSO rorting LAFHA, but is giving them 2 years to carry on doing it.

    I am a TEMPORARY RESIDENT, which by definition means my HOME is elsewhere – and I have been graciously included in the 2 year transition period if I can just show that my primary residence is HERE. As a temporary resident??????

    It is just amazing that the government of a developed country would even DARE to put such shambolic policy into writing.

    Fact.

  69. bob
    17 May 12
    12:17 pm

  70. @pommie bloke – mate that was a horrendous statement. Where your assimilation statement comes from is the fact that the majority of Pommies like to be by the sea, hence live in the same sorts of areas. THe only lot who dont seem to assimilate are the backpackers and they do one after 6 months anyway. All of my friendship group bar one are Aussies and Italians, Im guessing you have the audacity to actually hate Brits now that you have lived here for ages? bitter bitter man.

    THis is all complete hearsay. THere has been no official release from the govt. as to what is happening. My payrol company are also working on hearsay. Incredible that a govt could screw up so badly.

  71. Karen
    17 May 12
    12:25 pm

  72. I am on a 457 temporary visa and currently receiving a LAFHA. The removal of the LAFHA will have huge implications for me. I currently send $1500 per month home to pay my mortgage and insurances. Unfortunately I have tenant in my apartment who has not paid her rent since November last year and is refusing to vacate. The law in Scotland states that I cannot force her out without a court order, which is going to take me a further 3-4 months to obtain. Without the LAFHA I will be unable to make my mortgage payments back home.

    I’m shocked that the Australian government would take away the LAFHA without some sort of grace period. I’ve no idea how I will be able to make my rent in Australia and my mortgage payments. Going home is not an option as I don’t have a home to move into. I’m very disappointed to be treated in this way and can only hope that the government will revise their decision.

  73. Juan
    17 May 12
    12:28 pm

  74. At the end of the day we are guests in another country and barring exceptional circumstance where we can’t go home, civil war etc we must remember that we are here by choice and therefore we should abide by this countrys rules. It may be financially harder but the government are looking out for Australians which I feel is fair, if our governments did that in the first place we wouldnt all need to be over here getting jobs!

  75. Gary Mason
    17 May 12
    2:37 pm

  76. Whilst I understand the requirement to stop LAFHA, I still can’t believe that the reprieve is not for all as per the initial announcement on 9 May. I will be OK, but I know of some that will not be able to afford their rent which they are locked in to.

    Surely there has to be some common sense here with a reprieve for all? It will be interesting to hear why its not the same for both non-Australians and Australians

  77. Pommie Bloke
    17 May 12
    4:40 pm

  78. What Juan just said…

  79. Pommie Bloke
    17 May 12
    4:41 pm

  80. p.s. @Bob. I have some Italian friends too!

  81. jean cave
    17 May 12
    5:35 pm

  82. It is not a good look for Australia Tourism to treat it’s invited paying guests with contempt, so I hope they will rethink the transitional period thing.

  83. Aussie
    17 May 12
    5:58 pm

  84. Fellas, fellas, fellas.. oh how you have all missed the point.

    Thank you for correcting me on my ignorance on your differential tax rates. I obviously don’t look at tax rates as much as you do. Yeah I admit that sucks a little, kinda like how I felt when I went to London for 2 years and had to pay NI, which will go to fund your retirements, whilst I and thousands like me get nothing. Do you hear 100,000 returned Aussies complaining about the NI we paid which we cant acesss when we retire? No. Because whingeing is not an artform for us. And also because we travelled and lived in another country for the life experience, and made do with whatever income came in the door.

    The only rational response I have heard is that you don’t get much time to sort your affairs out. Fair cop, you cant just move homes and change schools in a month.. I agree that is quite unfair and harsh on you lot. But still, you are talking about having less dollars than before. It’s a relatively small issue for a limited time in the scheme of life. No one’s dying here.

    The key point you have all missed is you are WELCOME TO GO HOME. No one is holding you here against your will. If your take home pay is suddenly lower, you need to spend less. Spare me the “I cant afford to live here anymore” sob stories. If your $80k salary is now more like $70k, as I said earlier there are plenty of people who make do on lower salaries than you. You have choices people. And yes, life sucks sometimes. Adapt.

    And seriously – if you’re only here because of the LAFHA tax breaks and nothing else in Australia is attractive enough to entice you to stay in the country.. well it’s probably best Australia and you part ways. Good luck back in London.

    Bon Voyage,
    Aussie

  85. Aussie
    17 May 12
    6:00 pm

  86. @A Pomme Bloke – barbie’s on at my place on sunday arvo

  87. Cave Art
    18 May 12
    1:57 pm

  88. @Aussie – I concur that whingeing is not an art form for you. This is easily rectified with a few helpful pointers. Looking back over your extended and lengthy whinges I’m seeing a few patterns. Whilst you show a necessary and admirable stamina in the whinge you are lacking a little artful panache. I would recommend writing more key points in uppercase.

  89. RaoulDuke66
    18 May 12
    2:07 pm

  90. The positive news for temporary residents is that the relevant transitional elements as they are set out in the exposure draft legislation (Tax Laws Amendments (2012 Measures No.3) Bill 2012: deducting expenses for living away from home) are unlawful, as they breach all of Australia’s double-taxation treaties. These treaties are incorporated into Australian domestic law through the International Tax Agreements Act 1953.

    This is because, in respect of existing LAFHA arrangements until July 2014, temporary residents and foreign residents will be subject to an additional restriction to which permanent residents will not be subject – namely the requirement to maintain a dwelling in Australia – in breach of the non-discrimination clauses in each treaty.

    Taking the UK as an example, this contravenes Article 25.1 of the UK/Australia Double Taxation Convention, because it is subjecting UK nationals to requirements connected with income tax/FBT which is “other” and “more burdensome” than requirements to which Australian nationals are subject in the same circumstances, “in particular with respect to residence”.

    Further excellent news for UK nationals is that the Convention with the UK is the first Australian tax treaty to contain a non-discrimination article (Article 26) which gives taxpayers private rights of appeal. UK nationals have a direct right to appeal to the Australian Competent Authority, whose role includes assisting people who believe that the actions of Australia result or may result in taxation that is not in accordance with a particular tax treaty.

    In addition to posting this information on other forums to help people elsewhere, UK nationals who wish to oppose the discriminatory transitional arrangements, may wish to include the following material in their consultation responses (to fbt@treasury.gov.au), in their communications to the Australian Competent Authority (australiancompetentauthority@ato.gov.au), and in their communications to the further relevant contacts I’ve listed (see below)…

    “In respect of the Tax Laws Amendments (2012 Measures No.3) Bill 2012: deducting expenses for living away from home exposure draft (the “Exposure Draft”), proposed provisions in relation to Transitional – existing employment arrangements are in breach of the UK/Australia Double Taxation Convention (the “Convention”) applicable to both income tax and fringe benefits tax, incorporated into Australian domestic law through the International Tax Agreements Act 1953.

    Article 25.1 of the Convention, states:

    Nationals of a Contracting State shall not be subjected in the other Contracting State to any taxation or any requirement connected therewith, which is other or more burdensome than the taxation and connected requirements to which nationals of that other State in the same circumstances, in particular with respect to residence, are or may be subjected.

    According to the ATO:

    Article 25 (Non-discrimination) is included to protect nationals of one country from tax discrimination in the other country.

    According to the HMRC explanatory memorandum:

    …this Article provides that neither country shall impose discriminatory taxes (or requirements) on the nationals, permanent establishments and enterprises of the other.

    In respect of existing LAFHA arrangements until July 2014, as set out in the Exposure Draft, “temporary residents” and “foreign residents” (which includes UK 457 visa holders) will be subject to an additional restriction to which Australian permanent residents will not be subject – namely the requirement to maintain a dwelling in Australia – in breach of the non-discrimination clause.

    The result is that on 1 July 2012, UK nationals already working in Australia on 457 visas under LAFHA arrangements, will overnight see a decrease in their take home pay of up to 40% and possible immediate financial ruin, whereas the Australian Government has seen fit to put full transitional arrangements in place for Australians with existing LAFHA arrangements.

    In his justifications, it is entirely disingenuous for the Treasurer (and those under his authority) to continually suggest that all 457 visa recipients of LAFHA are highly-paid executives. The Temporary Skilled Migration Income Threshold is $49,330, compared to the average Australian full-time salary of $68,791(Q3 2011).

    It is unacceptable for the Treasurer to continually suggest that foreign workers (including UK nationals) who receive LAFHA are “rorting” (Australian slang, meaning “cheating” or “defrauding”) the system. The ATO website currently advises UK expatriate employees on 457 visas that they are entirely entitled to claim LAFHA if eligible under existing arrangements:

    Examples of employees on appointments of finite duration who will generally be living away from their usual places of residence are foreign nationals employed in Australia (expatriate employees)… In the case of expatriate employees having to reside in Australia for the term of their employment, each year we publish a tax determination outlining what we consider a reasonable food component.

    The proposed discriminatory transitional arrangements, based on the Treasurer’s disingenuous and offensive characterisation of UK nationals claiming LAFHA in line with ATO guidance, breach Australia’s obligations under the Convention and conflict with its International Tax Agreements Act 1953. Existing Australian domestic law and treaty obligations require that the transitional LAFHA arrangements applicable to July 2014, must be applied to UK nationals working in Australia on 457 visas in the same way as they will apply to Australians.

    In view of the Australian Government’s failure (in breach of its own guidelines on public consultation) to demonstrate how previous consultation responses to the Assistant Treasurer’s November 2011 consultation paper on LAFHA reform have been taken account of in the Exposure Draft (which responses explained inter alia that the Australian Government should not leave UK nationals who are tied into existing employment contracts and financial arrangements in Australia, to overnight financial ruin), it has been necessary to copy this consultation response to the following relevant parties:

    • the Australian Competent Authority at australiancompetentauthority@ato.gov.au;
    • Prime Minister, David Cameron, at camerond@parliament.uk;
    • First Secretary of State, Secretary of State for Foreign and Commonwealth Affairs, William Hague, at haguew@parliament.uk;
    • Deputy Prime Minister, Nick Clegg, at nick.clegg.mp@parliament.uk;
    • Leader of the Opposition, Ed Miliband, at ed.miliband.mp@parliament.uk;
    • Shadow Foreign Secretary, Douglas Alexander, at alexanderd@parliament.uk;
    • the Foreign and Commonwealth Office, at http://www.fco.gov.uk/en/contact-us;
    • Leader of the Australian Opposition, Tony Abbott, at Tony.Abbott.MP@aph.gov.au; and
    • Australian Shadow Treasurer, Joe Hockey, at joe@joehockey.com.”

  91. Sweden
    18 May 12
    2:21 pm

  92. @Aussie
    I think one of the reasons we don’t see 100,000 returned aussies complaining about the NI (I have only heard one – you), could be that they have claimed the rebate:
    http://www.1stcontactenews.co......insurance/
    Maybe you should have done that too, and you wouldn’t have to whinge over it here.

  93. Paddington guy
    18 May 12
    2:45 pm

  94. Good luck with that. If Tony and Joe indicate any interest in doing a sweet deal with you, could you please pass it on the SMH, because voters love to hear about the Libs supporting tax dodges for foreign workers.

  95. CLOSE OUT
    18 May 12
    3:08 pm

  96. Emma
    “I’m currently working for a company who has recently only employed overseas workers from the UK due to the fact that they are higher trained and have experience working in a faster-paced, cut throat UK media industry.”

    I thought that as Australians we had overcome our cultural cringe. Clearly if we are prepared to blindly accept this sort of crap we have not. Given Emma’s belief appears to be widespread it is not hard to understand the “attitude” that so often accompanies the accent.

  97. Darshan
    18 May 12
    3:13 pm

  98. foreigners can tax dodge in the UK, they get hand outs and free apartments in Chelsea and Kensington. Why cant we have the same??!! (jest comment before Aussie gets on his high horse)

  99. RaoulDuke66
    18 May 12
    5:44 pm

  100. @ Paddington guy – no need to do a sweet deal – only need to apply existing Australian law and international tax treaty obligations – and not a tax dodge for foreigners – is asking for parity with Australian taxpayers, in respect of the transition period – did you read/understand the post at all? – that’ll be why they need expats over here…

  101. jean cave
    18 May 12
    6:26 pm

  102. However 100,000 Aussies are still in the UK. More if you include people with Dual passports.
    They can claim a tax rebate for part years paid. NI is a contribution to help pay for free education, medical & social services. They don’t get that part back. UK doesn’t have portable Superannuation in the same way as Australia.

  103. Big Joe
    20 May 12
    7:57 pm

  104. You mean UK nationals will have to pay the same tax rates as Australians. I thought they were on a free gravy train that never stopped.

    If they don’t like it hear go back to the UK. Nobody is stopping you.

    I heard the economy in the UK and Euro is doing great guns!

  105. Pommie Bloke
    21 May 12
    11:38 pm

  106. @Aussie

    Bonza! I will grab some snags and a case, you get the ice and fire up the bbq. Too easy!

    BTW, for the whingers; the comment at 1.02 on this vid is all I have heard from the whinging LAFHA abusersing Pom’s this summer:

    http://www.youtube.com/watch?v=DvFormOyvBQ

  107. Aretic Disposition
    22 May 12
    1:39 pm

  108. Followed the discussion with interest and tried to keep a balanced position amidst the healthy ‘ pomme v Aussi’ debate.

    I summarise thus:

    1) Aussies win the moral debate, it has been abused and needs sorting out.. anger is understood and justified.

    2) Pommes win the practical debate. Its legality does look dubious for the transition arrangement and also despite it being morally wrong it has become ‘part of the system’ for companies and in certain sectors has helped attract companies to Aus it attracts ‘key international people’ whom then employ a number of locals.

    If it is ‘stopped dead’ for all 457 overnight I would say the net economic effect to Aus and australian jobs will be negative as well as it causing alot of problems for those who love it here, work hard and are on 457 visas on low salaries.

    In conclusion the sensible thing is probably to ‘wind it down’ over a couple of years. Simply for practical reasons,ok the abusers get an extension to their free ride but probably cutting off your own nose to spite your face to do it any other way.

    Not satisfactory but probably the ‘least worst option’ in a situation that has been allowed to go on for too long and is now, on a practical level, hard to get out of without alot of collateral damage to the innocent.

    Seem reasonable?

  109. Pommie Bloke
    22 May 12
    5:54 pm

  110. @Aretic Disposition

    Aussie might add you to the BBQ invite list, although it is his call…

    I think they should set up a new scheme called: QAT (Qualified Assistance Tax.)

    Once you land a job in Australia from oversea’s and you have been in it for more than 3 months you can apply for a tax break and a government department looks at what you do and decides if you should be allowed to receive any assistance.)

    LAFHA was set up for people who were inconvenienced by a change in where they work. Sending a graphic designer from London to Oz results in one benefit for the worker, being out of that hell hole London. Yet graphic designers, media buyers, ad exec’s etc are on LAFHA in droves…

    (I get my graphic design work done by people in Thailand for tuppence…)

    QAT !!!!!!

  111. Sweden
    22 May 12
    7:10 pm

  112. @Aretic Disposition
    Right on the money!
    Add a cap to and possibly the requirement to provide evidence that you are eligible for lafha during the transitional period, and I think it should appeal to even more Australians.

  113. jean cave
    22 May 12
    7:35 pm

  114. Hopefully though . . . this stuff is being sorted by the respective diplomats.

  115. Aretic disposition
    22 May 12
    8:47 pm

  116. Not holding my breath for a call from “Aussie”!

    Happy to be proven wrong though.

    A cap is a reasonable addition I would say as well set at a level which weeds out the rampant rorters from those simply caught up in a system not of their making. That with a transition for all to allow everyone to unwind from lease agreements etc etc etc.

    Probably the best you can do, Aussies should be angry with the politicians not the foreign workers. It was the politicians who allowed this stupid position to develop and become entrenched to the point where it is hard to unwind without shooting yourself in the foot.

    Will be interesting to see if pragmatism and broader interest wins the day or if the vote winning cry of “” Rort the foreign rorters” wins the day.

    2 or three weeks to find out.

    Who is your money on to win out?

    I don’t know enough of Aussie politics to say but I will know a lot more after it is announced as to how things work here.

  117. Ryski
    22 May 12
    11:25 pm

  118. I just love it when Aussies slag off Poms…….. You just never hear it the other way around. The bitterness is absolutely overwhelming. Where does it come from? Have we hurt you somehow? The xenophobia is so thick in this country it is practically suffocating. Quick – this is where you jump up and splutter “if you don’t like it, leave!” but how does that help you grow as a person or a nation?

    So ‘Poms’ leave, who are you going to rant about next? Pakistanis? Asians? Italians?

    I love this country and I love my Aussie friends. I trust my children with them, and vice versa. If I leave Australia I will miss them like I miss my UK family now.

    So where does the intolerable hatred of all things British come from?

    If Australians are so confident and happy with their country, then why the instant surliness to Brits? Do you not see how insecure and petty it makes you look? Posting hateful xenophobic comments via the anonymity of an internet chat board?

    NEWS BREAK: People ARE NOT queuing up to come here. Believe it or not, there are other countries in the world with low crime, nice beaches, low tax – and they all need skilled people. The mining boom that you think immunizes you from global financial catastrophe is de facto owned by China/India. The reason Australia ‘survived’ the GFC is because your markets aren’t as developed. All that has to happen is for China and India to decide to not buy your iron ore anymore. You’re screwed. Or how about in 2014 when China is expected to reform/convert its currency in order to create sovereign debt? The Aussie dollar is expected to hit US$1.70 – how do you think that will affect exports? It will just make you MORE dependent on peddling your (by then fantastically expensive) natural resources to developing nations……. Ouch. I could go on but I won’t. Basically, Australia: “you ain’t all that”. These are hard facts that as a country you will have to face, and soon. The politicians won’t advertise it: they’ve got you worked up about “tax dodging foreigners” – job done.

    Don’t believe the hype, please. Things aren’t great in Europe, but they never are. The UK is still a great place to live – we have our own currency and can quite literally just print more of the stuff, and issue sovereign debt. Are you forgetting the amount of RELEVANT culture and history over there too? Music, art, film, architecture, research, history……… the whole place buzzes with life – and you WON’T get mugged. There are more people in Greater Manchester than there are in the whole of Western Australia. There are more people in West Yorkshire than the whole of South Australia and the Northern Territory COMBINED, even if you count NT twice !! !! !!

    There is such a disparity with the Aus vs British attitude. British people in Australia see the shortfalls of this country as ‘quirkiness’ and ‘character’, something to fall in love with………… despite the “f**k off we’re full” and “you flew here, we grew here” sentimentality thrown at us.

    These reforms are causing SERIOUS problems to people in very skilled jobs, people with families. Engineering, IT, nursing, teaching………. there are thousands of foreign workers here on 2 or 3 years contracts, tied in with relocation expenses, signed up to 12 month leases – they all budgeted their time here on amount X, and are now being told they have to live on amount Y – and BECAUSE they’re foreigners they get 6 weeks to prepare, when Australians can CONTINUE to rort LAFHA for another 2 years. I will say it again: Australians do not even need to TRY to prove they are living away from a home in Australia until July 2014.

    Think about that.

    So jump up and shout “go home then, no-one’s forcing you to stay”, “good riddance” whatever. Behind the scenes, in 100,000 rented homes across this wonderful country, honest hard working SKILLED foreigners are desperately weighing up not many options at all.

    Take the time to look up sponsorship criteria for 457 visas. For every 457 a company sponsors, they have to demonstrably either train (or contribute to the training of) an Australian citizen.

    Come on Aussies – BE SMARTER. The “highly paid executives” you hate so much won’t leave – they’ll just adapt. The people that will leave are nurses, engineers, IT specialists, veterinarians…… They can’t afford to be squeezed like this.

    I promise this will hurt Australia, for a very short term political/financial gain, which is being pressed by the ‘true-blue’ Aussie Unions that bankroll the labour government. You are all being tricked, and that genuinely makes me sad.

    If you guys had 6 weeks to lose up to 25% of your take home, you’d be doing doughnuts in your V8’s to protest about it. When happens to Brits, you say “if you don’t like it, leave…”

    Please think. Please be smarter.

    Peace.

  119. Alan
    23 May 12
    8:38 am

  120. @Ryski

    Take a bow son!

    Pretty much the my sentiments down to a tee. We all love a good finger wag and an “I told you so” moment but in this case I don’t want it to happen.

    Australian’s are at the mercy of China, India and what they have buried underneath them, I just hope it is not the cause of their demise.

    Regarding LAFHA, I have made my thoughts clear previously here but I could not articulate it anywhere near as well as you Ryski.

  121. Deano
    23 May 12
    9:00 am

  122. Looking forward to Aussies’ BBQ with guest speaker Ryski. Wonderful statement Ryski – I couldn’t agree more with the majority of what you said. But most of my Aussie mates and people I interact with on a daily basis in my local community are not of the – “if you dont like it, eff off” moto, and do love the fact the pommies have integrated WELL into society (unlike Asians and Indians and to a lesser extent, Italians who keep themselves to themselves). I digress, but the point is, it is the uneducated redneck Aussies who have the “born here, you flew here moto”.

  123. Pommie Bloke
    23 May 12
    10:13 am

  124. @Ryski

    I am a Pom.

    I have read your waffle and will comment on the following:

    “I just love it when Aussies slag off Poms…….. You just never hear it the other way around.”
    – Yeah sure…

    “NEWS BREAK: People ARE NOT queuing up to come here. Believe it or not, there are other countries in the world with low crime, nice beaches, low tax – and they all need skilled people.”
    – Tell us where these divine countries with good wages and nice beaches are please oh seasoned one.

    “Basically, Australia: “you ain’t all that”.”
    – Blimey no chance of you assimilating anytime soon. “you, you, you…”

    “The UK is still a great place to live”
    – Check the link. Australia has 4 cities in the top 10 most liveable in the entire world. http://en.wikipedia.org/wiki/W.....ble_cities There are European cities on this list, however none are from the UK?

    “Are you forgetting the amount of RELEVANT culture and history over there too? Music, art, film, architecture, research, history……… the whole place buzzes with life”
    – Oh here we go. Culture this, culture that. For a sightseeing Britain it is great, although the pigeons tend to like the buildings these days, as well as the traffic smog… Have you been to Bendigo though? Amazing culture there, go there!!

    “– and you WON’T get mugged.”
    – wont you? http://www.nationmaster.com/gr.....tal-crimes

    “There are more people in Greater Manchester than there are in the whole of Western Australia. There are more people in West Yorkshire than the whole of South Australia and the Northern Territory COMBINED, even if you count NT twice !! !! !!”
    – That is precisely why I am here in wonderful Australia, to get away from the overpopulated UK. (p.s. just for your reference the majority of WA, SA and the NT are desert with the bread baskets being located on the coast…)

    “These reforms are causing SERIOUS problems to people in very skilled jobs, people with families. Engineering, IT, nursing, teaching………. there are thousands of foreign workers here on 2 or 3 years contracts, tied in with relocation expenses, signed up to 12 month leases – they all budgeted their time here on amount X, and are now being told they have to live on amount Y – and BECAUSE they’re foreigners they get 6 weeks to prepare, when Australians can CONTINUE to rort LAFHA for another 2 years. I will say it again: Australians do not even need to TRY to prove they are living away from a home in Australia until July 2014. Think about that.”
    – This is a very good paragraph. Means a lot. Doesn’t appear to be fabricated, nor can be totally dismissed with proven stats. I wonder out of all the people who are going to be crippled by the removal of LAFHA how many live in the Eastern Suburbs or Northern Beaches..? I would take Kellyville over Greater Manchester any day!

    “Please think. Please be smarter.”
    – I just had a thought about Australia’s main cities, each averaging more rainfall per year than London. I wonder if that is why so many Pom’s come over here and whinge like babies? Just kidding (about the whinging part.)

    Nurses, teachers, engineers or IT pro’s on important infrastructure projects that will benefit the long term future of this country – I certainly feel that their benefits should be seriously assessed and care should be taken to keep these guys looked after. Ad Exec’s…………?????!!!!!! Who’s social footprint is only worsened by investment bnkers – fck right off mate!!!

    I love Pom’s, erm, I am a Pom? I love Australia and prefer assimilation as opposed to obnoxious expats stomping around avoiding tax.

    Peace

  125. Aretic Disposition
    23 May 12
    8:28 pm

  126. Ryski,

    Loving th poetic rhythm in your post. a lot of ‘crap’ in there buy boy did you tell it well to the point i almost found myself believing I would rather live in Manchester than Sydney!

    It is a rare talent you have.

  127. I'm out of here too
    24 May 12
    10:58 pm

  128. @Pomme Bloke. I’m pressuming that unlike myself you are not someone that has moved over to Oz in the last 8 months on a 457 visa, whose income (including the LAFHA portion) was part of the decision making process to live in one of the worlds most liveable cities? These most liveable citites are also becoming the most expensive. The way the Australian government has rushed this through with no transition period and cosideration for people it will affect is pathetic. As Ryski commented, I also believe this is a change for short term political popularity. In the medium to long term, my bet is it will actually cost the average Oz citizen more in terms of inflated services prices.

    To top things off further, my wife who has been a qaulified teacher in the UK for 10 year can’t teach her either due to bizarre regulations (and yet there is a shortage of teachers in her field). Wow, you guys are leading the way over here! All I can say to Oz in general is best of luck. I very much doubt we will be coming back and yes there are many other great places to live and work in the world, especially if you are skilled workers. If you’re an Oz citizen, please vote for a less inward looking government next time round.

    Finally and in my opinion Oz will not be immune to the GFC dispite the mining boom. The shockwave of recession hitting Oz is not a matter of if but when. Couple that with the fact that people here seem happy to take stupidly high mortgages of up to 9x their income in some places (take Sydney for example), that is one all mighty property bubble ready to pop. You only have to see how much media attention a fraction of percentage point in interest rate changes gets to get an understanding of how many people are living on a financial cliff. This smells to me of the property crash that hit Ireland back in 2008. Anway, what a shame LAFHA is dead, bye!

  129. RW&B
    25 May 12
    10:57 am

  130. Oh Lordy, why don’t we read what almost EVERY EMPLOYER in Australia are saying about this on the Treasury’s website…

    Even better, read Ernst & Young’s thoughts on this DISASTER, which is signed by about 50 Aussie companies, including major miners.

    Hey, even ‘Taxpayers Australia’ reckon there needs to be a fair transition for EVERYONE.

    My particular favourite is the Australian Federal Police who actually ask that there submission isn’t published. That was clearly listened to :-)

    GO TREASURY !! !! !!

    In fact, you will struggle to find out of the 108 submissions, one that even comes close to supporting the reforms in their present form.

    BOOM!

    Enjoy all:

    http://www.treasury.gov.au/Con.....ubmissions

  131. RW&B
    25 May 12
    11:22 am

  132. Here’s my favourite, where AMEC basically say THERE WILL BE AUSTRALIAN REDUNDANCIES IF THE REFORMS GO AHEAD.

    Who’s yer daddy?

    http://www.treasury.gov.au/~/m....._AMEC.ashx

  133. Pommie Bloke
    25 May 12
    12:41 pm

  134. @I’m out of here too

    Re your comment: “my wife who has been a qualified teacher in the UK for 10 years can’t teach here either due to bizarre regulations (and yet there is a shortage of teachers in her field).

    – I know many UK teachers who come to Australia and are successful teaching and gain great positions at great schools? Did you check out teaching related regulation before you made the move? If you want to stay here for the long term surely your wife can sit the Australian teaching course and she will be sorted? (If you truly want to stay here that is?) You might have to undergo rural service though for a few years, just like the Aussie teachers have to. They usually throw in a house when you do!

    You also mention:
    “yes there are many other great places to live and work in the world, especially if you are skilled workers.”

    – Are you able to name 3 places for the record that would accommodate you and your wife better than Australia does? I know that your wife is a UK qualified teacher and I am guessing you work in the media / advertising field. It will be interesting to see, which places you classify as “great”, which will cater for your skills better than Australia, with the lifestyle etc

    As for your predictions of impending doom, well time will only tell I guess. 9 x salary for a mortgage is crazy, however those sorts of prices are for Eastern Suburbs / North Shore and Northern Beaches. If you lived in London you would expect to pay 9 x salary for a house within 10 km’s of the city and in a nice area wouldn’t you? We are talking Richmond, Chelsea, or Knightsbridge at those prices and they don’t have beaches!!

    House prices is an interesting discussion and Australia is certainly not immune to global economic up’s and down’s. I agree with you there. Europe is indeed coughing and spluttering and apparently parts of Melbourne have a housing over supply (just as you say, like area’s of Ireland did…) We shall see what happens.

    I wish you all the very best and would be interested to know your list of destinations that are currently better than Australia for people looking to live outside of the UK.

    Take care.

  135. Sweden
    28 May 12
    10:20 am

  136. @Ryski
    Extremely well said!

    @Pommie Bloke
    “Are you able to name 3 places for the record that would accommodate you and your wife better than Australia does?”
    “…would be interested to know your list of destinations that are currently better than Australia for people looking to live outside of the UK.”

    Pretty much says it all, doesn’t it. For Australians (including ex Poms) who still think Australia is Garden of Eden – I don’t think it is. I love my life here, but this country is not God’s gift to humanity. I guess the serpent (read: government) tempted us to eat a fruit from the forbidden tree (read: your tax money) , and now you are expelling us.
    But hey – I did not come to Eden to eat fruit. So why the heck did someone put the tree there in the first place and then ban me because I took a bite? Cut the tree down for heaven’s sake, but please don’t stick your filthy hand down my throat while I try to figure out what on earth happened.

    (and fyi: I am not a pom)

  137. Paddington guy
    28 May 12
    11:09 am

  138. @RW&B

    Your faith in the motivations of employer groups is touching but, I fear, not well founded.

    AMEC is a mining company. Of course they want taxpayers to subsidise their employees. Work it out.

  139. St Kilda
    28 May 12
    3:21 pm

  140. I’m an American living here collecting LAHFA. If the Australian govt. wants to end LAFHA to make-up for a budget shortfall then by all means do it and you won’t hear a complaint out of me. The American govt. would never allow a LAHFA like benefit for foreign workers coming to the US – so I get it.

    That being said – how the govt is handling this issue is a complete and utter debacle….and this is coming from an American I know all about govt. debacles. Look if you are going to end a benefit that will substantially reduce someone’s take home pay then you better have your act together. This waiting until the last minute nonsense is completely unecessary – how am I suppose to plan my family’s short-term future if I don’t know how much money I’ll have? If I’m going to be in a position where I can’t afford to live in Australia then at the very least make this decision and give me a little bit of time so I can adjust my lifestyle or move back to the US.

    End it or don’t end it – but either way make a decision.