13 February 2012
Industry leaders have raised concerns about the proposed changes to LAFHA affecting their ability to attract overseas talent.
On 29 November 2011, the Australian Government announced reforms to the fringe benefits tax (FBT) treatment of living away from home benefits. Government data shows LAFHA payments exploded from $161 million in 2005 to $740 million in 2012, with reports of widespread abuse. In line with the Government’s announcement, the Hon Bill Shorten MP, Assistant Treasurer and Minister for Financial Services and Superannuation, released a consultation paper last year and submissions closed on 3rd February 2012.
In the consultation paper, Hon Bill Shorten said the Government had allowed time to undertake consultation with stakeholders before the changes would commence. "In particular, we are seeking views on transitional and implementation issues, particularly from the community sector, and to identify whether there are any unintended consequences."
This week, technology industry leaders have raised concerns that if the Government decides to scrap the living away from home allowance, it will be damage their ability to attract overseas talent.
In a recent article in the Australian Business Review (ABR), they also warn it is likely to accelerate the trend for work to be sent offshore. While acknowledging some issues relating to LAFHA payments had to be addressed, the technology industry has criticised the Government for going too far.
Andy Cross, managing director of specialist recruitment company Ambition Technology, commented:
“There’s a lot of chatter about what this means that wouldn’t be happening if the government had gone to market with a proper evaluation of the impact. Some people have rorted the system, so I can understand why these changes have been mandated, but a lot of genuine people are going to get hurt by this.”
The Australian Computer Society has estimated that an extra 35,000 technology professionals will be needed during the next three years.
ACS chief executive Alan Patterson commented in the ABR that the cancellation of living away from home benefits would make it more difficult to attract skills from overseas.
“Our high taxes and high cost of living don’t help in attracting the world’s best and brightest ICT workers and these changes will further dissuade them from choosing Australia, reducing the competitiveness of our digital economy,” he said.
The proposed changes also make it more likely that work on existing technology projects in Australia will be sent overseas.
Comments from overseas employees in online forums have also described frustation that they were brought into roles in Australia without being told about the proposed changes to LAFHA.