The Australian Taxation Office (ATO) has been using data matching for the last few years to identify foreigners who are working as contractors (where they invoice the company) who do not pay the GST (or any income tax). They intend to expand the scope of these data matching exercises to identify foreigners working in Australia without work rights.
Non-Australians pay a flat tax rate of 29%. Anyone earning over $70,000 must charge GST on all invoicing. Working on an invoice basis is still working so any foreigner who charges on an invoice basis, must have working rights to do so, or they are breaching the conditions on their visa.
It is the responsibility of anyone who earns over $70,000 to collect 10% GST on behalf of the ATO, and to provide the GST monies collected to the ATO. Failure to do so is an offence, and if detected, can result in prosecutions (for visa breaches, and tax offences), deportation, and a ban on re-entering Australia. Similar consequences flow from working illegally in Australia.
It is very difficult for the ATO to collect the unpaid tax once the foreigner leaves Australia, as tax debts are extremely difficult to enforce outside the country in which they were incurred.
Visa and tax compliance are crucial requirements in satisfying the character requirements to get an Australian visa, so a foreigner who has not paid his taxes, and leaves, may face issues ever getting an Australian visa again (even a tourist visa).
Previous data-matching programs undertaken by the ATO, have led to the ATO concluding that there was an “elevated level of risk” for temporary working visa holders in relation to non-compliance and fraud, which is why they are expanding the scope of their data-matching.
The ATO intend to use data-matching to identify potential fraud and other breaches by visa holders.
The Department of Immigration and Citizenship (DIAC) will provide the ATO with access to the details of visa holders.
In particular, the ATO intends to check those holding working holiday visas, skilled visas, student visas and diplomatic staff.
The scheme is intended to protect Australian jobs from being taken by foreigners who do not possess the correct working rights, which is a hot political issue right now.
The ATO said that the details collected “will be electronically matched and analysed with certain sections of ATO data holdings to identify potential fraud, and other non-compliance with lodgment and payment obligations under taxation law”.
Information will include the place of study for student visa holders, the details of immigration agents, their overseas travel movements, and whether their immigration visas are valid.
The program will check that tax returns and business activity statements are being correctly completed by company sponsors and the visa holders, indicating they are meeting obligations set out in the visa conditions.
The 27 visa subclasses which hey intend to target are: 406, 410, 411, 415, 416, 417, 418, 419, 420, 421, 422, 423, 424, 426, 427, 428, 442, 457, 462, 570, 571, 572, 573, 574, 575, 576 and 580.
People found to be breaching conditions will be sent a letter and given 28 days to resolve any discrepancies – after which the ATO will take administrative action.
The agency said it will be sharing any information regarding visa holders not following the rules with the DIAC, which could result in visa cancellation and removal from Australia.
The ATO has requested an extension to deadlines that force all personal information not leading to a match being destroyed after 90 days, in accordance with guidelines set out by the Australian Information Commissioner.
The tax office said this is due to some visa subclasses spanning many tax years, arguing that it should be able to hold onto the data for up to three years.
Holders of 457 temporary skilled immigration visas have particularly been in the spotlight recently, with the Gillard government announcing it will be making reforms to the system to prevent alleged rorting by employers.
However, chief executive of the Australian Industry Group Innes Willox said: “This debate should be paused to allow some facts to be injected. No systemic rorting of the system has been uncovered.”
It remains to be seen whether the exercises actually result in any action being taken, and the important message is this: they are watching, they are sharing information so you need to ensure you fully comply with all visa and tax requirements whilst in Australia.
If you are not currently in full visa and tax compliance, then:
- You need to stop breaching your visa conditions, and/or pay all tax that is due to minimise the nature of the breach, and length of time in breach.
- It is extremely important that you are forthright in dealing with the issue because if the issue is detected by the DIAC or the ATO first, then the problem is significantly worse, and detention issues can arise, as can bridging visa issues.
- The quicker it is dealt with the better – letting the problem fester is the worst thing you can do.
- You should expedite seeking Permanent residency if you want to protect your right to be here. Holders of temporary visas are particularly vulnerable to deportation, bans on re-applying for a visa, and applying for bridging visas.
- You should discuss this with an experienced migration lawyer ASAP so that they can advise you on the risks being faced, and the best approach to take to resolve that risk.
Zeke Bentley of The Migration Place has over a decade of experience helping foreigners seek Australian residency, and helping foreigners deal with non-compliance issues. He also has extensive experience in taxation and criminal matters so he can advise on all relevant issues and the best way to deal with same.