Massive VENT: Thanks to the government, we we are losing 16% of our income!

[Ember]

I realize there's not a darn thing to be done about it, but I just need to wave my fist ineffectually at the world for a moment.

We relocated to Australia for a three year contract a little over a year ago. Now the government is stripping foreigners of a tax benefit calling the Living Away From Home Allowance (LAFHA). If you are Australian, there's a grandfather clause in place so that deals entered into previously are honoured. If you're a temporary resident, this benefit is being stripped as of Oct. 1st. The practical upshot is that we are losing 16% of our take home pay.

We live in one of the most expensive places in the world and we already live in a standard of living much lower than what we had in Canada (and pay and heck of a lot more to do so). Today, I HATE Australia and would happily see the whole continent sink into the sea.

Now, we will be fine. We live on one income and bank the other. I will re-budget us to try and continue to do this with the understanding it may not be possible. I am very grateful we are in a position we can cope with this, but I also think it's massively unfair.

Thanks for letting me vent. I don't want to make my husband feel guilty (He already does; sees it as his fault we're in this position.) but I really needed to get it off my chest.

 

[LuLuO]

I realize there's not a darn thing to be done about it, but I just need to wave my fist ineffectually at the world for a moment.

We relocated to Australia for a three year contract a little over a year ago. Now the government is stripping foreigners of a tax benefit calling the Living Away From Home Allowance (LAFHA). If you are Australian, there's a grandfather clause in place so that deals entered into previously are honoured. If you're a temporary resident, this benefit is being stripped as of Oct. 1st. The practical upshot is that we are losing 16% of our take home pay.

We live in one of the most expensive places in the world and we already live in a standard of living much lower than what we had in Canada (and pay and heck of a lot more to do so). Today, I HATE Australia and would happily see the whole continent sink into the sea.

Now, we will be fine. We live on one income and bank the other. I will re-budget us to try and continue to do this with the understanding it may not be possible. I am very grateful we are in a position we can cope with this, but I also think it's massively unfair.

Thanks for letting me vent. I don't want to make my husband feel guilty (He already does; sees it as his fault we're in this position.) but I really needed to get it off my chest.

What a bummer. 16% is huge. I know we would certainly struggle with such a situation. I hope you are able to budget to minimize the hurt.

 

[vicki_c]

Wouldn't the company you work for make up at least some of that in some kind of pay increase / COL adjustment? It's my understanding that most expatriates working for their firms overseas generally have an equal or better income situation than in the States due to combinations of salary / stipends / tax situations / etc.

 

[Ember]

Wouldn't the company you work for make up at least some of that in some kind of pay increase / COL adjustment? It's my understanding that most expatriates working for their firms overseas generally have an equal or better income situation than in the States due to combinations of salary / stipends / tax situations / etc.

Nope. It's a university researcher position, on a salary grid. There will be no more increases or adjustments to compensate. In the private sector, I'm sure this will happen, though.

 

[TheRatPack]

WOW, that's huge. I'm sorry......but I'm glad that you have a way to re-evaluate your other income and budget as necessary. I can't imagine the people that have no other income and no way to make up that loss.

 

[JennCa]

That sucks! Sorry to hear that, 16% is quite a bit.

Jenn

 

[Ember]

WOW, that's huge. I'm sorry......but I'm glad that you have a way to re-evaluate your other income and budget as necessary. I can't imagine the people that have no other income and no way to make up that loss.

Yes. I know we're lucky (and smart) to have opted never to increase our lifestyle with our income. It allowed us to live on one salary which is what is going to get us through this.

I feel terribly for people with children facing the cut, though. They already pay exorbitant amounts for schooling. And when, like us, you're in the middle of a contract and LAFHA was one of the big incentives to move...

I'm also interested in how the universities are going to cope. Like us, I bet many international researchers will be looking to leave as soon as possible. Most universities are at least 1/3 to 1/2 international depending on the faculty and skill set required. (For research positions, visiting academics, post docs, etc.) Universities depend on international talent as part of their reputations.

 

[BubMunkeyBles]

Are you being double taxed? We know people who are double taxed in the US and in Germany due to unique circumstances and I always thought that was unfair (American married to a German but he still works for the US in Germany on a military base). I always thought that was a crappy situation since both he and his wifes pay is taxed twice. Most countries have it so normally you would only be taxed by one country I thought though.

 

[arthuruscg]

He could renounce his citizen ship.

 

[crashbb]

He could renounce his citizen ship.

But the issue isn't with his home country, so renouncing his Canadian citizenship wouldn't help. He could become an Australian citizen (possibly renouncing his Canadian citizenship or possibly being a dual-citizen), but simply renouncing his Canadian citizenship wouldn't help. And, it takes years to become an Australian citizen.

 

[DawnM]

OH you are Canadian. I missed that the first time I read this. I was just about to come in and tell you that you need a new tax accountant!

That stinks. I don't know much about Canadian taxes.

 

[peyjax]

It stinks but 16% is better than the 20% you posted about back in January.

So I am not one to really research past posts. I was however having serious deja vu. I knew I remembered someone posting about this awhile ago. I was beginning to think I was crazy but alas No. You have posted this before. I googled LAHFSA and your old thread about you losing 20% showed up. That does not change the fact that it stinks though!

 

[crashbb]

OH you are Canadian. I missed that the first time I read this. I was just about to come in and tell you that you need a new tax accountant!

That stinks. I don't know much about Canadian taxes.

It has nothing to do with Canadian taxes - the issue is Australian taxes. It wouldn't matter if the OP was Canadian, American, or Ethiopan.

 

[mistysue]

I'm also interested in how the universities are going to cope. Like us, I bet many international researchers will be looking to leave as soon as possible. Most universities are at least 1/3 to 1/2 international depending on the faculty and skill set required. (For research positions, visiting academics, post docs, etc.) Universities depend on international talent as part of their reputations.

Honestly, I don't think the universities will do a thing. I say this because my DH also is a professor who does research... the last couple years that particular career path has sort of gotten crapped on. I'm in the US and a couple years ago everybody just started leaving the country or postponing graduation because they couldn't get ANY job, not even a poorly paid one. Then again, that's probably pretty much the story of how you landed in Australia.
Sorry to make that sound depressing, but academia is not doing as great as it has in the past. I'll keep my fingers crossed for both of us... it looks like things may start to get better. There is much more open for next year than there was last year.

 

[TheRatPack]

It stinks but 16% is better than the 20% you posted about back in January.

So I am not one to really research past posts. I was however having serious deja vu. I knew I remembered someone posting about this awhile ago. I was beginning to think I was crazy but alas No. You have posted this before. I googled LAHFSA and your old thread about you losing 20% showed up. That does not change the fact that it stinks though!

So you lost 20% in January and 16% now? Or was there speculation in January that it would be 20% but it dropped to 16%? Either way that is sad.....but I guess it would be even worse if you've now went through this cut twice

 

[rigs32]

I felt bad when I read your thread title, but I wish we could live on one income and bank the other. Am I jealous? I guess so.

 

[DawnM]

Oh, I missed that. Thanks. Will take another look.

It has nothing to do with Canadian taxes - the issue is Australian taxes. It wouldn't matter if the OP was Canadian, American, or Ethiopan.

 

[DawnM]

We live on one income, but I am not working outside the home right now. We had to move to a lower cost of living area to be able to do it though!

I felt bad when I read your thread title, but I wish we could live on one income and bank the other. Am I jealous? I guess so.

 

[Marionnette]

So you lost 20% in January and 16% now? Or was there speculation in January that it would be 20% but it dropped to 16%? Either way that is sad.....but I guess it would be even worse if you've now went through this cut twice

The OP's original thread was here:
http://www.disboards.com/showthread.php?t=2870970

From what I've been able to google, it allowed anyone who maintains a permanent home, other than where they are living in order to work, to be compensated for the increased cost by making that portion of their income untaxable. Apparently, this is a pretty substantial and was used by businesses to lure international talent.

Like most governments, Australia is looking for ways to raise revenues. What better way than to target the people who can't cast a vote? So, they've ammended the law to only cover people who maintain a home in Austrlia, while working elsewhere for their job. Even ex-pats can apply for the LAFHA but they would have to prove that they are maintaining two homes in Australia in order to qualify.

It's unfortunate that the OP has been caught up in this. At least she and her husband will be able to continue their standard of living without any hardship. And for every family in Australia that has been negatively impacted by this change, there are probably plenty of others who think it's great that foreigners are no longer able to enter their country, take "their" jobs and exploit a tax loophole that they, themselves, could not use.

 

[Ember]

I felt bad when I read your thread title, but I wish we could live on one income and bank the other. Am I jealous? I guess so.

Don't be. We have a standard of living much lower than we did in Canada to achieve this. I won't get into too many personal living details, but we live like students here because it's too expensive to do otherwise.

It stinks but 16% is better than the 20% you posted about back in January.

So I am not one to really research past posts. I was however having serious deja vu. I knew I remembered someone posting about this awhile ago. I was beginning to think I was crazy but alas No. You have posted this before. I googled LAHFSA and your old thread about you losing 20% showed up. That does not change the fact that it stinks though!

Yes, I did post before. And the final numbers are in and the decisions finalized! It's actually a bit more than 16%, but is indeed less than 20, due to a step up on the pay scale making up a bit of the shortfall.