Budgeting issues and concerns over displaced Australian workers have prompted the Australian government to make changes to their tax and visa policies. The proposed changes will force companies to pay more in order to bring in expats for temporary assignments, and will make it more difficult to issue 457 visas.
Fringe benefit taxes will cost employers
In October of 2012, the Australian government imposed a 46.5% tax on accommodations for international assignees that are living in Australia while working on temporary projects. They also increased the fees for visa applications submitted before July 2013. The government has now extended these taxes to employer-paid housing for these temporary workers as well. In other words, employers will now have to pay a fringe benefit tax for temporary housing of their employees.
If for example, a firm flew in an IT worker for a 3 month project and paid $150 a night to lease a 1 bedroom apartment, they would pay $13,500 for the lease and an additional ~$6,300 for the fringe benefit tax which totals nearly $20,000.
This change will serve as a deterrent for Australian companies who wish to fly in workers from other countries to work on temporary assignments. However, the government’s stance is that this will help employers hire more local employees and subsequently strengthen the economy.
Stricter 457 Visa Policies
In addition to the newly imposed fringe benefit taxes on housing, another controversial change made deals with the 457 visa policies. The 457 visa is specifically issued for skilled workers who will be working in the country for up to four years. However, recent concerns over the legitimacy of some of the visas being issued have caused the Department of Immigration and Citizenship (IMMI) to introduce changes to the policy. The Fair Work Ombudsman (FWO) will now have the power to monitor 457 visa policy compliance.
The FWO will specifically be checking that:
- Those issued 457 visas are paid market rates in accordance to their visa
- The job title and description on the approved 457 visa actually matches the work the visa holder is performing
The Australian government is making it clear that they do not want these visas to be issued haphazardly, and that they are only being used to fill legitimate needs. IMMI asserts that 457 visa holders and employers who are following the existing policies will not be affected by the changes. However, those who are in the process of getting their 457 visas will undergo a bit of a more rigorous approval process.
Employers must first look at Australia’s pool of available employees before seeking prospects internationally. When applying for a new visa, employers will have to show proof that they made an attempt to find a prospect in Australia first.
Impact of the changes
While countries such as the U.S and Germany have been attempting to ease their immigration policies to allow international skilled workers to come in and replace a retiring workforce, Australia’s changes are showing an opposite point of view.
Australia is known as a leader in IT and has attracted top candidates from all around the globe. However, author of The Immigrant Exodus: Why America is Losing the Global Race to Capture Entrepreneurial Talent, Vivek Wadhwa, feels that the recent changes will alter this. “After being recognized worldwide as a destination for smart technologists, [Australia] is reversing course. This is just when its local tech scene is beginning to flourish and when it needs these people the most,” says Wadhwa.
While these changes will undoubtedly help keep jobs in Australia, it could potentially push highly qualified skilled workers to other countries that have looser policies and don’t impose such heavy taxes.