9 May 2023
For your mobile workforce
Summary
The Albanese Government handed down its first full Federal Budget on Tuesday 9 May 2023. On the workforce front, the Budget focused on addressing cost of living pressures, implementing migration reform, and continuing the existing focus on the integrity of superannuation. Many of the measures affecting the workforce had already been announced with minimal surprises in the Budget.
The detail
Immigration headlines
Australia’s net overseas migration has rebounded strongly, with migration numbers forecast to surge in FY2023 and 2024 before stabilising in the following three years. According to Budget papers, the total population is expected to be 750,000 people (2.5%) smaller in June 2031 compared with pre-pandemic forecasts. Low unemployment and increased eligibility for temporary visas support higher levels of temporary migration.
The Budget headlines for immigration are as follows:
Visa application charges to increase
Most fees will increase by 6%, except for subclass Temporary Work Short Stay Specialist (subclass 400) visas, Training visas, Temporary Activities visas, Visitor visas and Working Holiday visas which will increase by 15%. Business Innovation and Investment Visas (which includes the Significant Investor Visa) fees will increase by 40%.
Migration compliance and enforcement
Today’s Budget proposes over $125 million of funding over four years to strengthen the migration system. This includes over $48 million to support visa processing officers and over $27 million to upgrade systems and improve efficiency. Over $50 million has been pledged to strengthen the migration system, including monitoring wages and conditions via Australia’s Single Touch Payroll as suggested by the Parkinson review.
Income tax
The Albanese Government has remained silent on the previous Government’s proposed modernisation of the individual tax residency rules, as well as the Stage 3 tax cuts kicking in from 1 July 2024.
For our Kiwi neighbours
The Government will create a direct pathway to Australian citizenship for New Zealand citizens without becoming permanent residents first from 1 July 2023.
Currently, many New Zealand citizens can qualify for the temporary resident tax concessions as the non-protected Special Category visa (subclass 444) visa is considered a temporary visa. We expect that New Zealand citizens will continue to qualify for the temporary resident tax concessions until they are granted Australian citizenship, however will need to wait for legislation to be released to confirm this.
Increase on tax in superannuation
The Budget reaffirmed that the tax on earnings relating to the portion of individual superannuation balances above $3 million will be increased from 15% to 30% from 1 July 2025.
Superannuation guarantee obligations
The Budget confirmed the previously announced “Pay Day Super” changes. From 1 July 2026, payment of Superannuation Guarantee contributions will be brought forward from the current quarterly deadlines to each pay day. It remains to be seen if a payment and reporting deadline extension will be available for employees paid from a foreign payroll, as previously seen with Single Touch Payroll concessions. The government has proposed a consultation process ahead of a final plan to be included in next year’s Budget.
The Budget also includes over $40 million to fund increased data matching capabilities to identify and act on underpayments of superannuation. Wage trust is already an area of focus for the ATO, this is clearly still in the Government’s sights. It’s key for organisations with globally mobile employees to actively monitor and identify their superannuation obligations.
Updates to the immigration thresholds flagged above have a flow on effect to employee superannuation guarantee entitlements, as these thresholds exclude mandatory employer superannuation contributions (currently 10.5%, scheduled to increase to 12% from 1 July 2025).
Contact us
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Vialto Partners (“Vialto”) refers to wholly owned subsidiaries of CD&R Galaxy UK OpCo Limited as well as the other members of the Vialto Partners global network. The information contained in this document is for general guidance on matters of interest only. Vialto is not responsible for any errors or omissions, or for the results obtained from the use of this information. All information is provided “as is”, with no guarantee of completeness, accuracy, timeliness or of the results obtained from the use of this information, and without warranty of any kind, express or implied, including, but not limited to warranties of performance, merchantability and fitness for a particular purpose. In no event will Vialto, its related entities, or the agents or employees thereof be liable to you or anyone else for any decision made or action taken in reliance on the information in this document or for any consequential, special or similar damages, even if advised of the possibility of such damages.
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Further information on Vialto Partners can be found here: www.vialtopartners.com
Vialto Partners (“Vialto”) refers to wholly owned subsidiaries of CD&R Galaxy UK OpCo Limited as well as the other members of the Vialto Partners global network. The information contained in this document is for general guidance on matters of interest only. Vialto is not responsible for any errors or omissions, or for the results obtained from the use of this information. All information is provided “as is”, with no guarantee of completeness, accuracy, timeliness or of the results obtained from the use of this information, and without warranty of any kind, express or implied, including, but not limited to warranties of performance, merchantability and fitness for a particular purpose. In no event will Vialto, its related entities, or the agents or employees thereof be liable to you or anyone else for any decision made or action taken in reliance on the information in this document or for any consequential, special or similar damages, even if advised of the possibility of such damages.
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