Australian Immigration Update – 2017 Federal Budget

The 2017-18 Budget that was announced last night included the following elements impacting Australia’s immigration and visa system:

Visa Application Charges (VAC) increase

Indexation of visa application charges will occur from 1 July 2017. All current VACs will be indexed annually in line with the forecast Consumer Price Index (CPI).

  • Indexation applies only to the 1st instalment component of the VAC, for both primary and secondary applicants.
  • Indexation does not apply to 2nd instalment VACs.

Revenue from VACs is expected to increase to $2,275.6 million in 2017-18, an increase of $190.1 million over the 2016-17 estimates.

Permanent Migration programme

The permanent migration programme will remain at 190,000 places for the 2017-18 programme.

Temporary Skills Shortage visas 

The Subclass 457 visa will be abolished and replaced by the Temporary Skills Shortage (TSS) visa.

The Skilled Occupation List is replaced by the Medium and Long-term Strategic Skills List. The Consolidated Sponsored Occupation List is replaced by the Short-term Skilled Occupation List.

Training Benchmarks – Skilling Australians Fund Levy

This levy is intended to replace the current training benchmarks for employers sponsoring workers on Subclass 457 and permanent Employer Nomination Scheme Subclass 186 visas.

From March 2018, businesses with turnover of less than $10 million per year will be required to:

  • make an upfront payment of$1,200 per visa per year for each employee on a Temporary Skill Shortage visa
  • a one-off payment of $3,000 for each employee being sponsored for a permanent Employer Nomination Scheme (subclass 186) visa or a permanent Regional Sponsored Migration Scheme (subclass 187) visa.

Businesses with turnover of $10 million or more per year will be required to:

  • make an upfront payment of $1,800 per visa year for each employee on a Temporary Skill Shortage visa
  • a one-off payment of $5,000 for each employee being sponsored for a permanent Employer Nomination Scheme (subclass 186) visa or a permanent Regional Sponsored Migration Scheme (subclass 187) visa.

The government seeks to achieve revenue of $1.2 billion over the forward estimates period, which will be used to meet future skills needs, with a particular focus on apprenticeships and traineeships.

Temporary Sponsored Parent visa

A new temporary sponsored parent visa will be introduced in November 2017, with 15,000 of these visas to be made available annually. This visa will allow the temporary stay of sponsored parents in Australia for periods of up to three or five years. The visa may be renewed from outside Australia to allow a cumulative stay of up to ten years.

Temporary sponsored parent visa holders will not be eligible to apply onshore for a permanent parent visa. The visa holder’s sponsor, their Australian child, will have legal liability for any public health expenditure (including aged care arrangements) incurred by the visa holder in Australia.

Age Pension and Disability Support Pension (DSP) eligibility

From 1 July 2018, stricter residency rules for new migrants to access Australian pensions will be introduced.  Claimants will be required to have 15 years of continuous Australian residence before being eligible to receive the Age Pension or DSP unless they have either:

  • 10 years continuous Australian residence, with five years of this residence being during their working life (16 years of age to Age Pension age); or
  • 10 years continuous Australian residence, without having received an activity tested income support payment for a cumulative period of five years.
  • Existing exemptions for DSP applicants who acquire their disability in Australia will continue to apply.
Foreign Investors

A Foreign Investors Tax Levy of $5000 per year will be imposed on foreign investors who do not occupy or lease their Australian properties for at least 6 months of the year.

The Government will extend Australia’s foreign resident capital gains tax (CGT) regime by:

  • denying foreign and temporary tax residents access to the CGT main residence exemption from 7:30PM (AEST) on 9 May 2017, however existing properties held prior to this date will be grandfathered until 30 June 2019
  • increasing the CGT withholding rate for foreign tax residents from 10.0 per cent to 12.5 per cent, from 1 July 2017
  • reducing the CGT withholding threshold for foreign tax residents from $2 million to $750,000,from 1 July 2017

The Government will also apply the principal asset test on an associate inclusive basis from 7:30PM (AEST) on 9 May 2017, for foreign tax residents with indirect interests in Australian real property. This will ensure foreign tax residents will not be able to avoid a CGT liability by disaggregating indirect interests in Australian real property.

Humanitarian Programme

The number of refugee resettlement places will increase by 2,500 to a total of 16,250 places in the 2017-18 programme.

In addition, the Community Support Programme will be expanded to offer 1000 sponsored refugee resettlement places. This programme enables individuals, groups and businesses to sponsor humanitarian entrants to Australia. Sponsors will be required to support humanitarian entrants during their first year in Australia, including funding the visa application, airfares and settlement services, and refunding any working age payments made to the humanitarian entrant.

All permanent humanitarian visa holders, including Community Support Programme entrants, will continue to have access to Medicare, English language tuition and employment services.

An additional $21.2 million will be allocated in 2017-18 to continue regional processing and resettlement arrangements. This includes funding to support the closure of the Manus Island facility in Papua New Guinea, and of regional processing activities in Nauru

Savings of $46.8 million will be achieved over the five years from 2016-17 by resolving the protection status of Illegal Maritime Arrivals (IMAs).

Department of Immigration and Border Protection 

The Government will invest $185.4 million over four years from 2017-18 in significant reforms to Australia’s visa processing arrangements, including:

  • enhancements to the visa framework to support economic and migration objectives;
  • improvements to existing ICT systems to support the potential for expanded service delivery by market based providers; and
  • replacements of existing ICT systems to enhance the Government’s ability to verify the identity of individuals arriving in Australia.

Total resourcing for the Department will decrease from the 2016-17 Budget estimate of $7.6 billion to an estimated $6.4 billion for 2017-18.

Source: Migration Institute of Australia (MIA Notice No 26: 9 May 2017)