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What Australian Business owners should know about the 457 Visa!

Due to the growing skills gap in Australia employers are more and more searching for quality staff overseas. It is predicted that we will be facing a shortfall of 2.3million workers according to the Boston Consulting Group report recently published.

 

A combination of the ageing population and population growth, coupled with aggressive infrastructure growth, is leaving serious shortfalls in the areas of health care, engineering, science and technology.

 

Recently the 457 Visa has come under much scrutiny from the opposition government and also unions, the argument being.  It’s giving jobs to migrants over Australians. The bigger picture is to bring the skilled migrants in now to cover the skill shortages otherwise it will be harder in the future. Sponsoring a migrant on a 457 for up to 4 years has been a means for up to 45,000 skilled migrants to enter the country each year. This figure will rise significantly in the coming years according to the Department of Immigration and Border Protection.

 

 

What you should know before using the 457.

 

Your business is required to meet certain criteria before you can sponsor skilled migrants. If you are considering sponsoring someone who is currently on a working holiday visa, firstly you must ensure you confirm their visa condition and the time period of the future employee’s current visa, and the employee is allowed to work for them.

 

  1. Eligibility

To be eligible as a sponsor under the 457 visa program, a business also must show that:

  • It is a lawfully operating business, with evidence of trading.
  • It is committed to investment in training; and it must meet training benchmark requirements. This is 1% to 2 % of your businesses wage bill.
  • It agrees to the number of 457 workers to be nominated.
  • It has no relevant adverse information against its business.

 

  1. Committed to hiring local labour first

A business must show they have attempted to fill the role with local residents first. This would normally be done through advertising in the local newspaper, or on the internet. Evidence of this must be provided during the application process.

LMT rules apply to sponsored occupations. However, exemptions apply to executive or senior manager occupations, or where it would conflict with Australia’s international trade obligations in some circumstances.

 

  1. Obligations        

Once your business has been approved to sponsor under the 457 visa program, you must be mindful of specific obligations which include:

Any changes to an employee’s visa status must be communicated within 10 days of the change occurring. For example, a change of job description or the employee leaving the business.

Keep good records of any training that has been conducted by the business.
Make sure the salary is fair market rate and is not inflated to meet the Temporary Skilled Migration Income Threshold of $53,900 per annum to qualify for the 457 visa program.
Ensure that job terms and conditions are equal to those provided to an Australian citizen or permanent resident.
The business must be able to prove the position is genuine and not just created to access the 457 visa program.

 

  1. Consequences

Existing visa approvals may be threatened if businesses don’t meet their obligations. Worse, a business could be barred from applying for approval to sponsor, or from sponsoring employees for a period.

Penalties ranging from $2040 to $51,000 for each failure can apply.

 

  1. Tax and superannuation

As part of the 2013 reforms, entitlement to tax concessions for temporary workers has been drastically reduced, says Tracy Angwin, founder of the Australian Payroll Association. The Living Away from Home Allowance has been all but eliminated, unless employers can prove the employee is living away from an Australian-based home maintained for personal use. Temporary residents are also not entitled to a tax-free threshold and therefore pay an overall higher amount of income tax.

As with residents and citizens, employers are required to make superannuation contributions for employees, with aw exceptions, such as senior executives.

 

  1. Commercial and productivity risk

When recruiting talent from overseas, costs can quickly get out of hand. Executive moves can cost hundreds of thousands of dollars in relocation expense alone. International moves involve personal upheaval and reliance on the family to transition to life in Australia. Without the right support and induction processes in place, companies risk relocation failure and a reduction in productivity and engagement.

 

If you are considering using the 457 Visa to sponsor staff it is best you contact a Visa Lawyer to discuss your obligations in full. The process if done properly can build a wealth of quality, qualified staff for your business, who want to put in a hard days work. Want more loyal staff? Most holders of the 457 Visa want to eventually gain Permanent Residency.

 

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