It is common for many employers to provide staff with the
opportunity to enter into salary packaging arrangements which can
provide benefits to maximise any available tax concessions.
Where the staff member is on a subclass 457 visa, or another
applicable temporary visa, it is important for employers to
understand how DIAC looks at these types of benefits both at the
time an application is submitted and thereafter as part of the
ongoing sponsorship obligations of the employer.
At the time an employer nominates an overseas worker for a
subclass 457 visa, information about the base salary and total
earnings of the individual needs to be provided. Total earnings
calculations can include wages, the amounts applied or dealt on the
employees behalf (for example allowances, additional superannuation
contributions), and the agreed money value of non-monetary benefits
(for example annual health insurance premiums).
Contingent payments such as bonuses, commissions and overtime
cannot be included, nor can superannuation payments made under the
Superannuation Guarantee Charge Act 1992.
In some circumstances, it is now possible for an employer to set
a subclass 457 visa holder's base rate of pay below the
Temporary Skilled Migration Income Threshold
(TSMIT), which is currently AUD49,336, provided
that the market salary rate for the nominated role is above this
threshold and the total earnings of the individual are at or above
the market salary rate. The exception to this relates to
individuals whose subclass 457 visa was granted prior to 14
September 2009, as their base rate of pay cannot fall below the
minimum salary level which applied to them prior to that date.
It is important that accurate information is provided to DIAC at
the time of application as it is this information which DIAC
subsequently refers to when monitoring and auditing activities take
place. As part of any monitoring activity, DIAC can request all
records relating to the payment and value of such benefits included
in the total remuneration calculations. Relevant records can also
be obtained from the Australian Taxation Office.
Even an inadvertent breach of a sponsorship obligation can
result in an unsatisfactory monitoring outcome. More serious
breaches can result in administrative sanctions and/or financial
penalties can be imposed upon a business sponsor causing severe
business interruption and impacting the employer's ability
to sponsor further overseas staff.
Tips to ensure immigration compliance when packaging salaries
contingent or one off payments should not be included into
earning calculations when preparing nomination applications.
ensure all salary packaging arrangements with subclass 457 visa
holders are well documented and records are readily available in
the event of a DIAC audit.
identify staff who had visas granted prior to 14 September 2009
and don't drop their base salary below the applicable
minimum salary level.
where the total earnings of an individual are subsequently
reduced from that initially approved by DIAC, a new nomination is
generally required to be submitted.
If you have any questions regarding salary packaging, please
don't hesitate to contact Sasko Markovski via phone +61 2
8224 8509 or email firstname.lastname@example.org or your usual Fragomen
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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The Federal Court handed down the largest court imposed fine for breaching subclass 457 visa sponsorship obligations.
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