Department of Immigration: Comments on proposed changes to Living Away From Home Allowance benefits for Subclass 457 visaholders

Australia’s Department of Immigration has posted on its blog commentary on the impact of the proposed changes to the taxation of the LAFHA.

From the Department’s perspective, if an employer has committed to pay a subclass 457 visa holder LAFHA “it is expected this payment will continue.”

The only difference will be how the Australian Taxation Office (ATO) views such payments.

For example, if a sponsor has committed to pay a subclass 457 visa holder a base salary of $75,000 plus $10,000 LAFHA, the Department of Immigration will expect the employee to continue to be paid a total of $85,000.

The blog does not indicate whether this $85,000 is a gross or a net payment, but the way the blog is worded indicates the gross taxable salary will be $85,000 – which means the sponsored employee will bear the tax on the LAFHA.

Whether this leads to demands for additional gross salary to put the sponsored employee in a no worse after tax position remains to be seen.