New Skilling Australians Fund Levy Coming This Summer Will Impact Your Bottom Line

May 2, 2018

UPDATE AND EDITOR'S NOTE 8 MAY 2018  The Skilling Australians Fund legislation was voted on and passed the Senate when it reconvened on May 8, after the original publication of this blog. As predicted below, the final draft is in essentially in the same form as discussed in this blog. The accompanying administrative regulations and expected implementation schedule have yet to be released. Continue monitoring this blog for additional details as they become available.

Amidst all the headlines on the death of Australia’s 457 Visa and the birth of the new Temporary Skill Shortage (TSS) Visa, some companies may have missed a lesser announcement, but one which may have more direct impact on the cost of hiring foreign nationals in Australia.

Included in the 2017-18 national budget announced in May of last year was a proposal for a new Skilling Australians Fund (SAF) to support up to 300,000 apprenticeships, traineeships, and other employment training opportunities for Australians.

The fund will be financed through a combination of state funds and the collection of a levy on companies sponsoring foreign nationals for employment visas. While the Skilling Australians Fund levy will replace the current “training benchmarks” sponsoring companies must meet, many companies are bracing for a significant increase in the cost of hiring foreign workers. But since the initial flurry of media coverage of the announcement in May 2017, limited concrete information has been available on the status of the proposed SAF levy.

What is the Current Status?

Originally slated for implementation this March, the legislation necessary to enact the Skilling Australians Fund and the corresponding levy has yet to pass Parliament. This has left States and local business groups wondering where the funds are for the job training programs promised by the federal government almost a year ago, and companies making plans to hire foreign employees wondering where to find the additional money to pay the levy in their current budgets.

The Migration Amendment (Skilling Australians Fund) Bill 2017 passed the House on February 12 and has been introduced in the Senate, but March’s Senate session ended April 4 with debate still pending on the bill. The next Senate session is set to resume May 8. However, the Senate quickly breaks again May 10, and the bill is not currently listed on the Senate calendar for the May 9-10 session. With the Senate not reconvening in June until the 18th, it appears that there is little chance of the bill being voted on by the Senate until the latter half of June.

The bill has received predominately favourable reaction among the members. There has been some debate over the need to clarify the mechanism for refunding levy fees paid by companies in the event that their nomination is unsuccessful or a foreign employee fails to report for work or leaves employment early. However, the primary criticism has been whether the bill will actually raise the promised AUS $1.5 billion necessary to sustain the SAF. Those doubts were heightened in January when Home Affairs released figures showing the number of skilled visas granted has dropped by more than one third since the bill was introduced. However, Newland Chase believes the bill will become law with little to no amendments sometime this Summer with the government tracking the funding sources and making funding adjustments for the SAF going forward.

What Will the SAF Levy Mean for Companies?

Once the SAF is implemented, the current training benchmark standards will be replaced by a levy charged on companies sponsoring foreign employees under the new TSS Visa, Employer Nomination Scheme (ENS) Visa, and Regional Sponsored Migration Scheme (RSMS) Visa streams. For companies in Australia not employing foreign workers, the new SAF should be positive and presumably result in increased funds and training opportunities for local workers.

On the other hand, for companies that rely on foreign workers, the result is less than clear, and the extent to which they will be impacted will depend on the manner and cost by which they were already meeting their training benchmark obligations. For example, companies using internal job training and apprenticeships may have found meeting the training benchmarks relatively easy and inexpensive and will find the new levy a substantial cost increase. However, companies which paid 2 percent of their annual payroll into an industry training fund may find the new SAF levy only a modest increase, depending on their annual turnover. Regardless of their current situation, Newland Chase is encouraging companies to budget for the costs of employing foreign workers to increase whether modestly or significantly.

Once implemented, the SAF levy will be payable at the time a company submits a nomination application for an employment visa. The amount of that levy will be determined by the company size and visa stream being used.

Under the TSS Visa program – Small companies (defined as those with annual turnover of less than AUS $10 million) will pay AUS $1,200 per year (or partial year) per nominee up to a maximum of AUS $2,400 per nominee. Larger companies (those with annual turnover over AUS $10 million) will pay AUS $1,800 per year (or partial year) per nominee up to a maximum of AUS $7,200 per nominee.

Under the ENS and RSMS Visa programs – Small companies will pay a one-off AUS $3,000 per nominee, and larger companies will pay a one-off AUS $5,000 per nominee.

For more information…

Keep reading this blog, and Newland Chase will continue to keep a close eye on developments on the enactment and implementation of the SAF levy and report on this and other important developments potentially impacting corporate immigration for our clients.

Also, join us May 8 and 9 (depending where in the world you are), as Newland Chase’s Director in Australia, Helen Duncan will present live from Brisbane  the webinar Life After Australia’s 457: How to Succeed Under the New TSS Visa where she will discuss the major changes taking place in corporate immigration in Australia. In this live interactive session, she’ll be covering the latest news on the overhaul of Australia’s largest employment-based visa stream and the replacement of the 457 Visa with the new Temporary Skill Shortage (TSS) Visa. Included will be information on the coming Skilling Australians Fund levy and essential strategies for companies to succeed in this changing immigration environment.

To register, visit the link here. All attendees will have an opportunity to get valuable practical insights, the latest information, and answers to their questions from a leading corporate immigration expert with more than 30 years’ experience weathering the changes in Australian immigration policy. All registrants will receive a recording of the webinar for their future reference.

This blog was prepared by the Knowledge Management team of Newland Chase. It is informational only and is not intended as a substitute for legal advice based on the specific circumstances of a matter. Readers are reminded that immigration laws are fluid and can change at a moment’s notice without warning or notice. Please reach out to your Newland Chase contact should you require any additional clarification or guidance. Written permission from the copyright owner and any other rights holders must be obtained for any reuse of any content published or provided by Newland Chase that extend beyond fair use or other statutory exemptions. Responsibility for the determination of the copyright status and securing any permissions rests with those persons wishing to reuse this blog or any of its content.