Proposed Changes to Benefits in Australia
December 12, 2011— The Australian government has proposed changes to the tax treatment of housing and food benefits that would significantly increase the business cost of employing foreign workers and foreign workers’ individual income tax. If implemented, the government's tax proposals would make foreign workers’ housing and food benefits subject to either Australia’s income tax or fringe benefits tax unless the workers were temporarily living away from an Australian home that is maintained for their own use. This is similar to the rules on taxable housing and food benefits that apply to Australian workers. The tax change would take effect starting July 1, 2012.
Currently, housing and food benefits are exempt from both income and fringe benefit taxes. This concession delivers significant tax savings to foreign workers and their employers and has played an integral role in many Australian employers’ recruitment and retention strategies. The practical effect of the government proposal would be to increase foreign workers’ tax liabilities and reduce their take-home pay. It would also increase payroll and fringe benefits tax costs for employers. It could deter foreign workers from moving to Australia when compared to other countries that have more beneficial tax regimes in place.
Though the proposed change would not directly change immigration regulations, but would affect how employers pay foreign nationals working under the subclass 457 category. Employers would need to consider the impact of the proposal when considering global mobility policies, including tax equalization arrangements, cost projections relating to assignments in Australia, salary clauses in current and future employment contracts, and recruitment and retention strategies to attract and retain foreign workers.
Australia is also proposing to create a new 12-month Resident Return Visa for permanent residents who do not accumulate two years of lawful residence in permanent status in the five years before applying for the visa. Currently, these permanent residents can obtain only a three-month Resident Return Visa. Those who have accumulated the necessary two years of lawful residence, or who can show substantial business, cultural, employment or personal ties with Australia that benefit the country, can obtain a five-year Resident Return Visa. |
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AIReS, which was named to the 2011 Inc. 5000 list of fastest-growing independently owned businesses in the U.S., is in its 30th year of providing best-in-class relocation management services. With seven ISO registered U.S. offices and other strategically located employees located around the globe, AIReS is a recognized industry leader in delivering high quality relocation and assignment management services to leading corporations. The company boasts some of the industry’s highest annual customer-satisfaction scores and a client-retention rate of over 98%. For more information, please visit the AIReS website at www.aires.com. |
