Australia – Taxation of international executives

Taxation of international executives

Taxation of international executives

  

Overview and Introduction

A person’s liability to Australian tax is determined by their residence status for taxation purposes and the source of income derived by them.

The general rule is that a person who is a resident of Australia is assessable on worldwide income (except to the extent that it is exempt income). Non-residents and temporary residents are generally only assessable on income derived directly or indirectly from sources in Australia.

Net taxable income is taxed at graduated rates ranging from 19 percent to 45 percent. Different rates apply to non-residents. Generally, all non-cash fringe benefits provided to employees are subject to fringe benefits tax (FBT), a tax payable by the employer, with the value of such benefits being exempt from income tax in the hands of the employee.

Australian residents (although not all expatriates) are also subject to a health care levy (Medicare Levy).

The official currency of Australia is the Australian Dollar (AUD).

Herein, the host country/jurisdiction refers to the country/jurisdiction to which the employee is assigned. The home country/jurisdiction refers to the country/jurisdiction where the assignee lives when they are not on assignment.

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Income Tax

Tax returns and compliance

When are tax returns due? That is, what is the tax return due date?

Tax returns are due by 31 October following the tax year-end. If you use a tax agent to lodge your return, an extension is automatically available through to 31 March or 5 June the following year depending on the taxpayer’s prior lodgment history.

What is the tax year-end?

30 June.

What are the compliance requirements for tax returns in Australia?

Residents

Tax returns are required to be filed by a resident individual whose total income derived from sources in and out of Australia is more than the minimum threshold (AUD18,200 for 2021/22). For temporary residents, non-employment income derived from sources outside of Australia is generally ignored for this purpose. Furthermore, employment income derived from sources outside of Australia, prior to arrival in Australia, is generally ignored for this purpose.

Spouses file separate tax returns. There is no joint filing in Australia.

The tax-free threshold will be available only on a pro-rata basis in the year where a taxpayer:

  • becomes an Australian resident (for tax purposes) or
  • ceases to be an Australian resident (for tax purposes).

Non-residents

Tax returns are required to be filed by non-residents who derive any Australian-sourced income (other than franked dividends, interest, managed investment trust income or royalties, and departing Australia superannuation payments which are subject to a final withholding tax).

Tax rates

What are the current income tax rates for residents and non-residents in Australia?

Residents and temporary residents

Income tax table for 2021/2022

Taxable income bracket

 

Total tax on income below bracket

Tax rate on income in bracket

From AUD

To AUD

AUD

Percent

0

18,200

0

0

18,201

45,000

0

19

45,001

120,000

5,092

32.5

120,001

180,000

29,467

37

180,001

Over

51,667

45

 

Income tax table for 2020/2021

Taxable income bracket

 

Total tax on income below bracket

Tax rate on income in bracket

From AUD

To AUD

AUD

Percent

0

18,200

0

0

18,201

45,000

0

19

45,001

120,000

5,092

32.5

120,001

180,000

29,467

37

180,001

Over

51,667

45

Non-residents

Income tax table for 2021/2022

Taxable income bracket

 

Total tax on income below bracket

Tax rate on income in bracket

From AUD

To AUD

AUD

(Percent)

0

120,000

0

32.5

120,001

180,000

39,000

37

180,001

Over

61,200

45

 

Income tax table for 2020/2021

Taxable income bracket

 

Total tax on income below bracket

Tax rate on income in bracket

From AUD

To AUD

AUD

(Percent)

0

120,000

0

32.5

120,001

180,000

39,000

37

180,001

Over

61,200

45

Residence rules

For the purposes of taxation, how is an individual defined as a resident of Australia?

A resident is defined as a person who resides in Australia and includes:

  • a person who is domiciled in Australia, unless the Commissioner is satisfied that their permanent place of abode is outside Australia
  • a person who has been in Australia continuously or intermittently during more than one-half of the year of income, unless the Commissioner is satisfied that their usual place of abode is outside Australia and that they do not intend to take up residence in Australia or
  • a person who is a member of specific government superannuation plans, or the spouse of a person who is a member of specific government superannuation plans.

Generally, individuals who come to Australia with an intention of living in Australia in a routine manner for 6 months or more would be treated as tax residents of Australia from the date of arrival.

A temporary resident is a person who is a resident of Australia (using the definitions noted earlier) and who is the holder of a temporary visa. Persons who are Australian citizens, permanent visa holders, or holders of special protection visas (or the spouse of one of these) cannot be considered temporary residents of Australia.

Is there, a de minimus number of days rule when it comes to residency start and end dates? For example, a taxpayer cannot come back to the host country/jurisdiction for more than 10 days after their assignment is over and they repatriate.

No. When a tax resident departs Australia whether they become a non-resident from that date depends on their longer-term intentions with regard to remaining abroad and returning to Australia, as well as whether they have ongoing ties with Australia, rather than the actual number of days absent.

What if the assignee enters the country/jurisdiction before their assignment begins?

The assignee may become a tax resident of Australia on the date they enter Australia, rather than the date their assignment begins, if earlier.

Termination of residence

Are there any tax compliance requirements when leaving Australia?

A final income tax return will be required for the tax year in which they departed.

What if the assignee comes back for a trip after residency has terminated?

The residency tests above need to be considered each time the assignee returns to Australia. In addition, if the trip back is anticipated at the time that they departed Australia, this may defer the date that they become a non-resident for tax purposes.

Communication between immigration and taxation authorities

Do the immigration authorities in Australia provide information to the local taxation authorities regarding when a person enters or leaves Australia?

The Department of Immigration and the Australian Taxation Office have initiated a data- matching program to ensure taxpayers are correctly meeting their taxation obligations.

Filing requirements

Will an assignee have a filing requirement in the host country/jurisdiction after they leave the country/jurisdiction and repatriate?

The assignee will be required to file a tax return for the year of departure, and also any subsequent year in which they have income which is taxable in Australia.

Economic employer approach

Do the taxation authorities in Australia adopt the economic employer approach to interpreting Article 15 of the OECD treaty? If no, are the taxation authorities in Australia considering the adoption of this interpretation of economic employer in the future?1

Australian taxation authorities can adopt the economic employer approach. They consider a number of circumstances to determine the economic employer, for example which entity bears the risk or has control/responsibility over the employee. Thus, in cases where an employee works in the business and is under the control of the Australian entity, the Australian entity might be considered as the economic employer even if no costs are recharged to it.

De minimus number of days

Are there a de minimus number of days before the local taxation authorities will apply the economic employer approach? If yes, what is the de minimus number of days?

No.

Types of taxable compensation

What categories are subject to income tax in general situations?

  • earned income*
  • income from employee share or option plans
  • income from self-employment
  • trade or business partnership
  • dividends
  • interest
  • rental income
  • capital gains
  • foreign exchange gains.

*Employment income is taxable when received or when the employee is entitled to receive it, if earlier. Employment income is generally subject to tax to the extent it was earned/derived during a period of Australian residence, or in the case of income earned/derived while non- resident, to the extent it was earned in respect of duties performed in Australia.

Intra-group statutory directors

Will a non-resident of Australia who, as part of their employment within a group company, is also appointed as a statutory director (i.e. member of the Board of Directors in a group company situated in Australia trigger a personal tax liability in Australia, even though no separate director's fee/remuneration is paid for their duties as a board member?

It depends, see outline below.

a) Will the taxation be triggered irrespective of whether or not the board member is physically present at the board meetings in Australia?

In general, a tax liability will arise where the income is considered Australian sourced. This will generally be driven by the physical location of the director for each board meeting, however the relevant clause of the Double Tax Agreement (if applicable) in place between Australia and the individual’s home country/jurisdiction must also be taken into account.

b) Will the answer be different if the cost directly or indirectly is charged to/allocated to the company situated in Australia (i.e. as a general management fee where the duties rendered as a board member is included)?

No.

c) In the case that a tax liability is triggered, how will the taxable income be determined?

Refer to part a) above.

Tax-exempt income

Are there any areas of income that are exempt from taxation in Australia? If so, please provide a general definition of these areas.

Living away from home allowance

  • Australian citizens and permanent residents can be provided tax-exempt accommodation and a food and drink allowance for a maximum period of 12 months per work location provided they meet certain conditions as follows.
    • They are required to live away from their usual place of residence solely for the purpose of their employment.
    • Their usual place of residence is available to them for immediate use and enjoyment.
    • Accommodation expenses are substantiated by either the employee or employer. Food and drink expenditure is not required to be substantiated up to certain limits based on family structure, however any amounts in excess must be substantiated.
    • An annual declaration is made.
  • Employees working on a rotational basis (regardless of immigration status) are not required to meet the requirement of maintaining their usual place of residence for immediate use and enjoyment and can be provided the above benefits for an unlimited period.
  • These changes were introduced during 2012 and transitional measures apply in respect of existing arrangements in place at 8 May 2012 which have not been renewed or materially varied.

Other:

  • Reimbursement by the employer of the actual cost of relocation will generally be exempt from both income tax and FBT.
  • An interest subsidy is not taxable to the employee but FBT may be payable by the employer (even if the loan is provided by an overseas related company). If the employee uses the loaned money for purchasing assets that produce assessable income, for example, no FBT will be payable.
  • Bonuses received by a temporary resident after arrival in Australia will not be subject to Australian tax on that part of the bonus that relates to services performed prior to arrival in Australia

Expatriate concessions

Are there any concessions made for expatriates in Australia?

Temporary residents must maintain a home for immediate use and enjoyment in Australia to access the concessions detailed above for Living Away From Home benefits, unless they work on a rotational basis.

Salary earned from working abroad

Is salary earned from working abroad taxed in Australia? If so, how?

If the recipient is a tax resident of Australia at the time then yes, it is taxable in Australia with a credit allowed for foreign taxes paid on that income.

If the assignee is a tax resident of both Australia and the country/jurisdiction where the services were performed, then any relevant double tax treaties need to be considered to determine which country/jurisdiction has the right to tax the income.

Bonuses received by a temporary resident after arrival in Australia will not be subject to Australian tax if they relate to services performed prior to arrival in Australia.

Non-residents are not subject to tax on salary earned from working abroad.

Taxation of investment income and capital gains

Are investment income and capital gains taxed in Australia? If so, how?

Investment income (such as dividends, interest, and rental income) and capital gains are assessed to tax in the year in which they are derived. They are included in total taxable income. Tax is levied at personal income tax rates, and a claim may be made to offset foreign taxes paid on foreign-source income.

Assignees who meet the temporary resident definition discussed earlier are generally exempt from tax on foreign investment income and gains.

Gains from stock option exercises

Following a number of recent legislative changes to the taxation of employee share schemes in Australia, the Australian tax implications associated with these arrangements for employees who relocate internationally between grant and vesting are extremely complex.

The ultimate Australian tax treatment of employee share scheme income can be influenced by factors including, but not limited to, the terms of the plan, the type of instrument, the date of grant, the date of vest, the other country/jurisdiction or countries/jurisdictions of residence, and the Australian visa status of the employee.

Transient employees should seek advice that is specific to their facts and circumstances.

From 1 July 2015 there are new tax rules for the treatment of employee share schemes including a concession for start-up companies. The key change is in relation to the deferred taxing point for ESS interests which will help realign the Australian tax treatment of employee share scheme income with international best practice.

Foreign exchange gains and losses

Certain foreign currency gains and losses are brought into account. These can include, among other items:

  • transactions on a foreign currency bank account
  • re-payment of foreign currency debt.

There are a number of elections that can be made within statutory time limits, including:

  • the limited balance election – gains/losses from transactional accounts with an aggregate balance of AUD250,000 or less may be disregarded
  • retranslation method – gains/losses calculated by reference to the opening and closing account balances and the total additions to, and withdrawals from, the account over the period.

Capital gains and losses

The Australian taxation system includes a capital gains tax (CGT), which in broad terms applies to certain assets acquired, or deemed to have been acquired, after 19 September 1985 upon their realization (or deemed realization). Gains taxed under the CGT provisions are not taxed separately but are included in assessable income and taxed at the individual’s marginal rates.

Where assets are held for 12 months or more, the gain on disposal is calculated in one of two ways.

  • Discounted method - the amount of the nominal gain may be discounted by 50 percent.
  • Indexation method - the asset cost base can be indexed in accordance with the rate of inflation for periods of ownership up to 30 September 1999.

Where the asset was purchased prior to 21 September 1999 and disposed of after this date, the taxpayer may calculate the gain using either the discount or indexation method. Where the asset is purchased and sold after 21 September 1999, the taxpayer is only able to calculate the capital gain using the discount method.

For assets held for less than 12 months, the gain cannot be discounted or indexed.

The 50 percent discount is not available to non-residents or temporary residents for any disposals after 8 May 2012. It will remain available for capital gains accrued prior to this time when non- residents and/or temporary residents choose to obtain a market valuation of assets as of 8 May 2012.

Capital losses

Capital losses are offset against gross gains realized in the current year (pre 50 percent discount, if available) with the balance carried forward and offset against realized capital gains in subsequent years. Capital losses cannot be increased by indexation.

Gifts

Disposal of an asset by gift is a realization event, with the disposal consideration and cost of acquisition by the person receiving the property being taken to be the fair market value of the gifted property.

Are there capital gains tax exceptions in Australia? If so, please discuss?

Are there capital gains tax exceptions in Australia? If so, please discuss?

Principal residence exemption

CGT does not apply to an individual’s principal residence (including a reasonable amount of land (up to two hectares)) provided the house or land is not used for the purpose of gaining or producing assessable income.

This exemption is not available for individuals who are non-resident of Australia for tax purposes at the time of disposal.

Pre-CGT assets

The CGT provisions do not apply to assets acquired prior to 20 September 1985.

Deemed disposal and acquisition

At the time of becoming a resident, the CGT legislation deems a person to have acquired assets, other than taxable Australian assets, for their fair market value on that date. Where a resident breaks Australian residency, the person is deemed to have disposed of all assets for their market value at that time except for certain taxable Australian assets which remain subject to the CGT provisions.

When a person ceases to be an Australian resident, they may elect to treat all assets as Taxable Australian assets until the assets are disposed of or until they resume resident status in Australia. This election effectively operates to defer CGT on such assets until they are actually disposed of, subject to the operation of a double tax treaty.

For non-residents and temporary residents, gains accrued after 8 May 2012 no longer qualify for the 50 percent discount. Non-residents/temporary residents retain access to the full CGT discount for capital gains in respect of increase in value of assets up to 8 May 2012 (subject to conditions). Where an individual was partly a non-resident/temporary resident during the period after 8 May 2012, the discount percentage is apportioned based on Australian residency period.

Further, where a person leaving Australia was in Australia on 6 April 2006 and has held Australian resident status for less than 5 of the 10 years preceding their departure, they will be exempt from Australian CGT on non-Australian assets owned prior to becoming a resident and retained at the date of departure.

The deemed disposal and acquisition rules do not apply to temporary residents, however, are activated at the time the temporary resident becomes a permanent resident.

General deductions from income

What are the general deductions from income allowed in Australia?

A deduction is permitted in relation to all losses and outgoings to the extent that they are incurred in gaining or producing assessable income, except to the extent to which they are losses or outgoings of a capital nature. In addition, deductions are specifically permitted for certain types of expenditure such as:

  • costs incurred in the course of employment (for example subscriptions to professional associations and journals)
  • gifts to charities registered as deductible gift recipients in Australia
  • interest expenses incurred on borrowings to acquire an income-producing asset
  • tax agent fees
  • expenses relating to business use of an employee-owned vehicle.

Tax reimbursement methods

What are the tax reimbursement methods generally used by employers in Australia?

Current year gross-up is the normal method of recognizing tax reimbursements paid by the employer.

Calculation of estimates/ prepayments/ withholding

How are estimates/prepayments/withholding of tax handled in Australia? For example, pay- as-you-earn (PAYE), pay-as-you-go (PAYG), and so on.

Pay-as-you-go (PAYG) withholding

Withholdings from employment income are covered under the PAYG system.

When an individual is paid by their employer, the employer will be required to withhold tax from their salary and wages and remit the tax to the Australian Taxation Office (ATO).

When an individual commences employment, they will be requested to quote their Tax File Number (TFN) to their employer. While quoting a TFN is not compulsory, if not done, the employer will be obliged to make PAYG withholdings at the top marginal income tax rate.

At the end of the year the employer will provide the individual with a payment summary which shows the income earned and tax withheld during the year.

The employee should retain a copy of the payment summary to assist in the preparation of their income tax return.

PAYG Installments

Under the PAYG system, an individual may be subject to PAYG instalment tax payments if they received investment or business income in their last income tax return of AUD4,000 or more. Wages and salary income is not included for PAYG instalment purposes. The instalments are payable either annually or quarterly.

An individual will not be obliged to pay PAYG instalments unless notified by the ATO to do so.

Relief for foreign taxes

Is there any relief for foreign taxes in Australia? For example, a foreign tax credit (FTC) system, double taxation treaties, and so on?

Under the foreign income tax offset (FITO) system all assessable foreign-source income, including dividends, interest, and royalties derived by Australian residents (excluding temporary residents), will be subject to Australian income tax with a credit allowed for foreign tax paid on that income.

An FITO is only available where both:

  • a resident taxpayer’s assessable income includes foreign income
  • the taxpayer has paid foreign tax in respect of that foreign income, being tax for which the taxpayer was personally liable.

The offset cannot exceed the amount of Australian tax payable on the foreign income.

General tax credits

What are the general tax credits that may be claimed in Australia? Please list below.

Tax offsets, as opposed to tax credits, may be available for:

  • dependent spouse
  • low income

Tax offsets differ from tax credits as they can only be used to reduce the employee's tax liability; any excess cannot be refunded.

Sample tax calculation

This calculation assumes a married taxpayer resident in Australia with two children whose 3-year assignment begins 1 July 2018 and ends on 30 June 2021. The taxpayer’s base salary is 100,000 US dollars (USD) and the calculation covers 3 years.

 

2019

USD

2020

USD

2021

USD

Salary

100,000

100,000

100,000

Bonus

20,000

20,000

20,000

Cost-of-living allowance

10,000

10,000

10,000

Housing allowance

12,000

12,000

12,000

Company car

6,000

6,000

6,000

Moving expense reimbursement

0

20,000

20,000

Home leave

5,000

0

0

Education allowance

3,000

3,000

3,000

Interest income

6,000

6,000

6,000

Exchange rate used for calculation: USD1.00 = AUD1.40

Other assumptions

  • All earned income is attributable to local sources.
  • Bonuses are paid at the end of each tax year and accrue evenly throughout the year.
  • The employee does not meet the conditions for exemption in respect of accommodation and cost of living benefits.
  • The company car is used for business and private purposes and originally cost USD50,000.
  • The employee is resident throughout the assignment.
  • Tax treaties and totalization agreements are ignored for the purpose of this calculation

Calculation of taxable income

 

2019

AUD

2020

AUD

2021

AUD

Days in Australia during year

365

366

365

Earned income subject to income tax

 

 

 

Salary

140,000

140,000

140,000

Bonus

28,000

28,000

28,000

Cost-of-living allowance

0

0

0

Net housing

0

0

0

allowance*

 

 

 

Company car*

0

0

0

Moving expense reimbursement*

0

0

0

Home leave*

0

0

0

Education allowance*

0

0

0

Total earned income

168,000

168,000

168,000

Other income

8,400

8,400

8,400

Total income

176,400

176,400

176,400

Deductions

0

0

0

Total taxable income

176,400

176,400

176,400

* Taxed as fringe benefits and not included in this calculation.

Calculation of tax liability

 

2019

AUD

2020

AUD

2021

AUD

Taxable income as above

176,400

176,400

176,400

Total Australian tax*

52,765

52,765

50,335

*This does not include the Medicare levy.

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FOOTNOTES:

Economic employer approach - Certain tax authorities adopt an ‘economic employer’ approach to interpreting Article 15 of the OECD model treaty which deals with the Dependent Services Article. In summary, this means that if an employee is assigned to work for an entity in the host country/jurisdiction for a period of less than 183 days in the fiscal year (or, a calendar year of a 12-month period), the employee remains employed by the home country/jurisdiction employer but the employee’s salary and costs are recharged to the host entity, then the host country/jurisdiction tax authority will treat the host entity as being the ‘economic employer’ and therefore the employer for the purposes of interpreting Article 15. In this case, Article 15 relief would be denied, and the employee would be subject to tax in the host country/jurisdiction.

Sample tax calculation - Sample calculation generated by KPMG Australia Pty Limited, the Australian member firm affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity, based on the Australian Income Tax Rates Act1986, Medicare Levy Act 1986 and Income Tax Assessment Act 1936 Part VIIB, Australian Income Tax Assessment Act 1936 and Australian Income Tax Assessment Act 1997, the Australian Fringe Benefits Tax Assessment Act 1986, Australian Taxation Administration Act 1953

  

Special considerations for short-term assignments

Residency rules

Payroll considerations

Taxable income

Additional considerations

For the purposes of this publication, a short-term assignment is defined as an assignment that lasts for less than 1 year.

Residency Rules

Are there special residency considerations for short-term assignments?

A person in Australia temporarily (but long enough to become a tax resident as discussed earlier) and who is the holder of a temporary visa is only subject to tax on employment income derived while in Australia, plus any Australian-sourced income. Persons who are Australian citizens (or the spouse of an Australian citizen), permanent visa holders, or holders of certain special protection visas cannot be considered temporary residents of Australia and are therefore subject to tax on their worldwide income.

Payroll considerations

Are there special payroll considerations for short-term assignments?

No, the payroll implications are the same for permanent residents as temporary residents.

Taxable income

What income will be taxed during short-term assignments?

The only income that will be taxed during short-term assignments are the assignee's employment income, Australian-source income, and gains from taxable Australian assets.

Additional considerations

Are there any additional considerations that should be considered before initiating a short-term assignment in Australia?

An assignee who becomes a tax resident may be liable to pay the Medicare Levy and Medicare surcharge, depending on their level of income and whether there is a reciprocal health agreement between Australia and their country/jurisdiction of origin.

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Other taxes and levies

Social security tax

Are there social security/social insurance taxes in Australia? If so, what are the rates for employers and employees?

Employer and Employee

Type of Insurance

Paid by employer

Paid by employee

Total

Superannuation guarantee*

10.0 percent

0.0 percent

10.0 percent

Medicare levy**

0.0 percent

2.0 percent of taxable income

2.0 percent

Total

10.0 percent

2.0 percent

12.0 percent

* Rate of 10.0 percent is applied to a capped earnings level of AUD58,920per quarter (2021/22 rates).

** Rate of 2.0 percent will be applied for the 2021/22/20 tax year. In some cases, a Medicare Levy Surcharge may be payable if the individual and their dependents do not have appropriate private hospital health insurance and the total of their taxable income and reportable amounts exceed the set thresholds. The rates that apply vary from 1 to 1.5 percent and apply to the total of their taxable income and reportable amounts; not just their taxable income.

Gift, wealth, estate, and/or inheritance tax

Are there any gift, wealth, estate, and/or inheritance taxes in Australia?

No.

Real estate tax

Are there real estate taxes in Australia?

Some states charge an annual land tax which is based on the value of land held in that state. If the property is your main residence, it will generally be exempt from the tax.

Sales/VAT tax

Are there sales and/or value-added taxes in Australia?

A goods and services tax (“GST”) of 10 percent applies in respect of most goods supplied and services provided in Australia.

Unemployment tax

Are there unemployment taxes in Australia?

No.

Other taxes

Are there additional taxes in Australia that may be relevant to the general assignee? For example, customs tax, excise tax, stamp tax, and so on.

Payroll Tax

Employers may be liable to payroll tax where the annual payroll exceeds certain threshold levels. Rates and thresholds vary between states.

Work Coverage

Compulsory workplace insurance must be acquired by employers in respect of employees working in Australia.

Foreign Financial Assets

Is there a requirement to declare/report offshore assets (e.g. foreign financial accounts, securities) to the country/jurisdiction’s fiscal or banking authorities?

No.

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Immigration

Following is an overview of the concept of Australia’s immigration system for skilled labor.

(E.g. which steps are required, authorities involved, in-country/jurisdiction and foreign consular processes, review/draft flow chart illustrating the process)

International Business Travel/Short-Term Assignments

Describe (a) which nationalities may enter Australia as non-visa national, (b) which activities they may perform and (c) the maximum length of stay.

Only Australian citizens may enter Australia without a visa. All international arrivals who are not Australian citizens must obtain an Australian visa before they will be permitted entry.

Describe (a) the regulatory framework for business travelers being visa nationals (especially the applicable visa type), (b) which activities they may perform under this visa type and the (c) maximum length of stay.

There are a number of short-term Australian visas available for business travelers.

Visa type

Activities

Maximum length of stay

Subclass 600 Visitor Visa (Business Visitor Stream)

Business Visitor Activities

Up to 3 months

Subclass 601 Electronic Travel Authority (ETA)

Business Visitor Activities

Up to 3 months

Subclass 651 eVisitor

Business Visitor Activities

Up to 3 months


In Australia, business visitors must generally limit their activities to the following:

  • General business or employment enquiries, including attending internal meetings or discussions
  • Investigate, negotiate, enter into or review a business contract
  • Conduct activities as part of an official government visit
  • Take part in a conference, trade fair or seminar

Activities which result in work or services provided to a business or organization based in Australia are strictly not permitted.

Outline the process for obtaining the visa type(s) named above and describe (a) the required documents (including any legalization or translation requirements), (b) process steps, (c) processing time and (d) location of application.

GENERAL REQUIREMENTS FOR BUSINESS VISITORS

Documents provided must be in English

  • Valid passport or travel document;
  • Proof of return or onward travel;
  • Proof of sufficient funds to cover all costs while in Australia;
  • Details of activities planned while in Australia such as letters of invitation from host organization, conference registration details, proof of employment overseas; and
  • Proof individual only intends to stay temporarily in Australia
  1. Document gathering (1-2 weeks)
  2. Prepare Visa application (1-2 days)
  3. File Visa application online with the Department of Home Affairs
  4. Obtain Visa and travel to Australia

Individuals holding eligible passports can apply for the ETA online or through authorized travel agencies when booking flights. ETA visas are generally processed immediately.

Due to COVID-19, some visa processing times have been affected and applications may take longer to finalise. Generally processing times for the subclass 600 and 651 visas vary from 7 days to 45 days.

Are there any visa waiver programs or specific visa categories for technical support staff on short-term assignments?

Yes, the subclass 400 Temporary Work visa is suited to individuals travelling to Australia for highly specialized short-term work that is non-ongoing in nature. This visa type allows for a maximum stay in Australia of up to 3 months, or up to 6 months in certain circumstances.

For short-term assignments longer than 3 or 6 months, the Temporary Skill Shortage (Subclass 482) visa is most suitable.

Long-Term Assignments

What are the main work permit categories for long-term assignments to Australia? In this context please outline whether a local employment contract is required for the specific permit type.

Temporary Skill Shortage

The Temporary Skill Shortage (subclass 482) visa permits employers to employ skilled foreign nationals to perform work in Australia where they cannot source an appropriately skills Australian worker. A local employment contract or assignment letter may be provided.

Provide a general process overview to obtain a work and residence permit for long- term assignments (including processing times and maximum validation of the permit).

There are three steps in obtaining the 482 visa:

1. The company must become an approved standard business sponsor

The business must be actively and lawfully operating in Australia. It is also possible for an overseas business to obtain sponsorship in certain circumstances.

2. The company must lodge a nomination application to nominate the visa applicant to a skilled position

The sponsor must nominate the visa applicant under a sponsorable ANZSCO occupation. There are current three occupation lists:

  • Short-term Skills Occupation list (STSOL);
  • Medium and Long-term Strategic Skills List (MLTSSL); and
  • Regional Occupation List (ROL);

The nominated position must be a genuine full-time role.

3. The visa applicant must apply for and be granted a subclass 482 visa.

The visa can be granted for up to 2 or 4 years depending on the nominated occupation, or up to 5 years for a Hong Kong passport holder.

Is there a minimum salary requirement to obtain a long-term work and residence permit for assignments? Can allowances be taken into account for the salary?

The nominating business must ensure that the nominee’s earnings and all other employment conditions are no less favorable than those that are, or would be, offered to an Australia employee working in the same role and location. The minimum salary must be in line with the market salary rate for the occupation, and no lower than the Temporary Skilled Migration Income Threshold currently set at $53,900.

Base salary and any guaranteed allowances may be taken into account when determining salary arrangements.

Is there a fast-track process which could expedite the visa/ work permit?

Priority processing is not currently available. However, accredited business sponsors may benefit from streamlined processes and faster processing times.

At what stage is the employee permitted to start working when applying for a long-term work and residence permit (assignees/ local hire)?

The employee may only commence work for the business once the visa has been approved.

Can a short-term permit/ business visa be transferred to a long-term permit in Australia?

Subject to ‘No further stay’ conditions on the existing visa and the legislative requirements of the intended visa, an application for a longer-term visa may be made in Australia.

Is it possible to renew work and residence permits?

Yes. Individuals who hold a 482 visa in an occupation on the short-term occupation list will be able to renew once while in Australia, with further renewals needing to take place while the individual is outside of Australia. Individuals with visas on the long-term occupation list will be able to renew while in Australia without restriction.

Is there a quota or system or a labor market test in place?

Unless an exemption is available, Labour Market Testing must be undertaken to evidence that the business has been unable to recruit a suitable Australian to fill the role.

Exemptions apply where Labour Market Testing would conflict with Australia’s International Trade Obligations (ITOs) in an of the following circumstances:

  • the worker nominated is a citizen/national of China, Japan, Mexico, Thailand or Vietnam, or is a citizen/national/permanent resident of Canada, Chile, South Korea, New Zealand or Singapore
  • the worker nominated is a current employee of a business that is an associated entity of the sponsoring business and the associated entity is located in an Association of South-East Asian Nations (ASEAN) country/jurisdiction (Brunei, Myanmar, Cambodia, Indonesia, Laos, Malaysia, Philippines, Singapore, Thailand or Vietnam), Canada, Chile, China, Japan, Mexico, South Korea or New Zealand
  • the worker nominated is a current employee of an associated entity of the sponsoring business and that associated entity operates in a country/jurisdiction that is a member of the World Trade Organisation (WTO), and the nominated occupation is an Executive or Senior Manager occupation for the purposes of ITOs and the nominee will be responsible for the entire or a substantial part of the company's operations in Australia
  • the sponsoring business currently operates in a WTO member country/jurisdiction or territory and is seeking to set up a business in Australia, and the nominated occupation is an Executive or Senior Manager occupation for the purposes of ITOs
  • the worker nominated is a citizen or an eligible permanent resident* of a WTO member country/jurisdiction or territory and has worked for the sponsor in the nominated position in Australia on a full-time basis for the last two years.

Alternative requirements to the labor market testing may apply where:

  • the nominee has an internationally recognized record of exceptional or outstanding achievement in a profession or in the field of sport, academia and research, or a top-talent chef
  • the application is for an existing TSS visa holder solely because there has been a change to the visa holders’ annual earnings or there has been a change in business structure
  • there is an Intra-Corporate Transfer (ICT) of an existing employee of a company operating overseas to an associated entity in Australia
  • the annual earnings of the individual will be equal to or greater than AUD250,000
  • the nominee is a Medical Practitioner or Ambulance Officer and Paramedic

The business will also be required to pay a one-off Skilling Australians Fund levy for each nomination application lodged. The amount payable will depend on the annual turnover of the business and the duration of the visa being requested.

General Immigration Related Questions

Would it be possible to bring family members to Australia?

Yes, family may be included in the application with the primary visa applicant or may be included post grant of the visa. Members of the family unit that may be included in the application extend to Spouses/de facto partners and children under the age of 18. Children above the age of 18 may be included in certain circumstances.

Is it possible to obtain a permanent residence permit?

Yes, however eligibility is determined by a number of factors including age of the applicant and the occupation list the nominated occupation sits on.

Generally, applicants for permanent residence in Australia must be under the age of 45 and nominate an occupation on the MLTSSL.

What if circumstances change after the Work and Residence application process?

Applicants and Sponsors have an obligation to notify the Department of Home Affairs of any changes in the situation including but not limited to:

  • changes to contact details and passport
  • changes to your employer/cessation of employment
  • changes to employment status including promotions , duties, hours, change of work location
  • the birth of a child

How long can a permit holder leave Australia without their permit becoming invalid?

This would depend on the circumstances.

Generally, subclass 482 visa holder are not permitted to cease work for 60 days or more.

Subclass 482 visa holders who are still employed, but are taking a period of unpaid leave, may remain outside of Australia for up to 3 months. Paid leave will not impact on the validity of the visa.

Periods of time outside of Australia for work purposes which are directly related to the individual’s employment in Australia will not impact on the validity of the visa.

Must immigration permissions be cancelled by the end of the assignment/employment?

Yes. Sponsors must notify the Department of Home Affairs when a visa holder ceases employment. This notification must be made within 28 days of the last day of employment.

Are there any penalties for individuals and/or companies in place for non-compliance with immigration law?

Penalties may apply for the individual and the companies. Penalties could be deportation of the employees, restriction on re-entering Australia or monetary fines. The company could face having the sponsorship cancelled or being barred from sponsoring for a specified time. Financial penalties for the corporation and/or the individual may apply.

Other Important Items

List any other important items to note, or common obstacles faced, in Australia when it comes to the immigration processes.

Immigration advice provided by Registered Migration Agent 0429163

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Disclaimer

All information contained in this publication is summarized by KPMG Australia Pty Limited, an Australian limited liability company and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. The information contained in this publication is based on the Australian Income Tax Rates Act 1986, Superannuation Guarantee Charge Act 1992 and the Superannuation Guarantee (Administration) Act 1992, Medicare Levy Act 1986 and Income Tax Assessment Act 1936 Part VIIB, Australian Income Tax Assessment Act 1936 and Australian Income Tax Assessment Act 1997, the Australian Fringe Benefits Tax Assessment Act 1986, Australian Taxation Administration Act 1953, Part 2-5, Australian Income Tax Assessment Act 1997 Division 102 (section 102-5 is the operative provision which includes net capital gain in assessable income), Australian Taxation Office web site ATO assist at www.ato.gov.au or Tax Pack.