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Government announces changes to 457 visa

Tax Insights

Temporary Employer Skilled Migration Programme – 457 visa to be replaced

The Prime Minister, Malcolm Turnbull, announced, 18 April 2017, that the government will abolish the current, and often controversial 457 visas (Temporary Skilled Work Visas). The 457 programme will be replaced by a new Temporary Skill Shortage (TSS) visa programme. The new visa process will focus on protecting Australian workers by restricting the TSS visa to employees working in areas of critical skill shortage in Australia.

From today, 19 April 2017, the approved skilled occupation list, which dictates eligible occupations, will be condensed by removing about 200 occupations from the listing.

For further information about the eligible occupations please click here.

New TSS Programme

Implementation of the new TSS is proposed to commence in March 2018.  The new visas will be for foreign workers where an Australian worker cannot be sourced, and it will comprise:

  • short-term stream – for up two years
  • medium-term stream - for up to four years

As part of the new TSS process, there will be new eligibility criteria including; minimum 2 years’ work experience in the skilled occupation, reintroduction of labour market testing, minimum market rate salary, English language skills required for all workers, mandatory police checks and strengthening the requirement for employers to provide training of their Australian workers.     

Implications for existing 457 visa holders 457 visa changes

Current employees holding a 457 visa will not be affected by the current proposed changes. 

Pending 457 visa applications

Any pending applications already lodged will be considered, provided the employee’s nominated occupation remains on the occupation list.  If the occupation category has been removed from the list, the application will be returned together with the application fee.

Transition to March 2018

We know the new TSS programme commences from March 2018 but it is not clear if there will be any transitional rules to be introduced before the commencement of the new visas.  We will need to wait for further updates from the government in this regard.

ATO Data Matching for employer sponsored visa holders

Included in the announcement is the government’s intention to commence matching details of the remuneration nominated in the employee’s visa application lodged with Department of Immigration and Border Protection with the actual remuneration reported to the Australian Taxation Office.

As an employer sponsor, now is the time to review the current arrangements in place for any sponsored employee to ensure the remuneration paid is in accordance with the nominated visa application, as well as reported to the ATO.  At the same time it would be prudent to ensure any employer superannuation obligations have been met, and if an exemption is available, the appropriate paperwork is in place – such as holding a valid 'certificate of coverage' from the home country tax authority.

At RSM we can help you stay on top of alerts and ensure you are kept up to date.

If you have any queries in relation to the changes the government has issued for visas, please contact your local RSM office today.

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