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Re: Allowances applicable to employment

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I'm new

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Replies 2

Hi,

I have just come across a salary structuring scheme as below:

i.   organization is a government entity outside Brisbane in a regional area

ii.  it employs staff from outside the region to come and work in the local area

iii. it pays a "allowance" equal to LAFHA rates PLUS actual rent paid in the local area where the staff works; they call this LAFHA although it is more than just the LAFHA rates

iv. this allowance is then deducted as a pre-tax dedcution from the staffs gross salary to arrive at the taxable salary

v. the entity, thus, does not have to pay any extra cash out but the relevant staffs gain by the reduced tax at their marginal rates - at more than 37% level.

vi. no FBT is paid - the logic being these are LAFHA allowable under legislation

vii. The arrangement is not supported by respective employment contract or by any policy of the organization

viii. the beneficiaries provide a annual declaration declaring their principal place of business outside the local area (say in BNE or Gold Coast, Sunshine Coast as the case maybe) and the rent agreement in their local accommodation based on which Payroll allows the allowance and pre-tax deduction

ix. the arrangement is not evidenced for validity by any advice from a competent person. It is just authorised by the HR Manager via an email

x. the arrangement is in operation to the same staffs for more than 3 years.

 

Queries I have is is this a valid arrangement. Under which part of the tax laws do I find the validation.

 

Kind regards

 

SS2

 

 

1 ACCEPTED SOLUTION

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Best answer

Community Manager

Replies 0

Hi @SS2,

 

Thanks for your patience.

 

There are a lot of things that need to be considered with this one.

 

This is an interesting question when you start working through it, the arrangement would need to meet a a lot of criteria that is listed here;

As we would need a lot more information to assist you we would suggest you contact our early engagement team.

 

KylieS

 

 

2 REPLIES 2
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Community Manager

Replies 0

Hi @SS2 

 

It looks like the Community hasn't been able to assist, we'll look into this one and get back to you as soon as we can.

Highlighted

Best answer

Community Manager

Replies 0

Hi @SS2,

 

Thanks for your patience.

 

There are a lot of things that need to be considered with this one.

 

This is an interesting question when you start working through it, the arrangement would need to meet a a lot of criteria that is listed here;

As we would need a lot more information to assist you we would suggest you contact our early engagement team.

 

KylieS