Morrison flags foreign worker levy in 2017 Federal Budget

Morrison flags foreign worker levy in 2017 Federal Budget

Aussie IT providers that hire recruits from overseas on skilled worker visas could be slugged with an annual levy under the new Budget measures

Australian Treasurer, Scott Morrison, handing down the 2017 Federal Budget on 9 May.

Australian Treasurer, Scott Morrison, handing down the 2017 Federal Budget on 9 May.

Aussie IT providers that hire recruits from overseas on skilled worker visas could be slugged with an annual levy that could come to thousands of dollars per worker each year, under new measures in the 2017 Federal Budget.

Australian Treasurer, Scott Morrison, handed down the Federal Government’s Budget for 2017-18 on 9 May, highlighting the skilled migration levy, which could see some organisations faced with an annual levy charge of up to $5000 for some workers.

In his Budget speech, Morrison said that, until now, employers have had to contribute one or two per cent of their payroll to training foreign workers they have employed, but claimed these requirements have “proven difficult to police”.

As such, he outlined new measures replacing these requirements with an annual foreign worker levy of $1,200 or $1,800 per worker per year on temporary work visas and a $3,000 or $5,000 one-off levy for those on a permanent skilled visa.

The Government aims to raise $1.2 billion from this levy over the next four years, in a bid to contribute directly to a new 'Commonwealth-State Skilling Australians Fund'.

Morrison said that Australia's states and territories will only be able to draw on this fund when they deliver on their commitments to train new apprentices.

“Skilled migration has always played a significant role in driving our economic growth. But it must be on our terms and we must skill more Australians to secure jobs,” he said.

Skilled migration has been high on the Government’s agenda, with the Australian Prime Minister, Malcolm Turnbull, flagging plans on 18 April to abolish the 457 visa, which has habitually been used by local tech players to hire international talent and fill skills gaps, and replacing it with a new temporary visa.

“We are an immigration nation, but the fact remains, Australian workers must have priority for Australian jobs, so we’re abolishing the 457 visas, the visas that bring temporary foreign workers into our country,” Turnbull said previously.

“We will no longer allow 457 visas to be passports to jobs that could and should go to Australians,” he said.

Under the changes, the four-year 457 visa is being replaced by two new temporary visa categories, the first of which will be a short-term visa, allowing for a period of up to two years, and covering a smaller number of occupations than the current 457 regime.

The second, medium-term replacement visa option will last for a period of up to our years, and will require tightened English language requirements, and will be issued only for more critical skills shortages.

Since then, the plan has met with some criticism from the industry and garnered mixed reactions.

Following the move, on 21 April, Australia’s Minister for Industry, Innovation and Science, Arthur Sinodinos, conceded that there has been debate in the local tech community around some of the measures, claiming that there is a possibility of engagement in dialogue with industry representatives on the matter.

On 4 May, in response to the Federal Government's decision to scrap the 457 visa program, Labor leader, Bill Shorten, swore to mandate a new ‘SMART’ visa category if his party forms government.

Also on the government's radar, Morrison spoke about the crackdown on multinationals that he claims have not been paying their fair share of tax - an issue that has seen some of the biggest tech brands in Australia, such as Apple, Microsoft and Google, come under scrutiny.

“The ATO has already raised $2.9 billion in tax liabilities this year against a group of just seven large multinational companies, and expects to raise more than $4 billion in total this financial year from large public companies and multinationals,” he said.

As part of this measure, he said the government will be tightening the Multinational Anti-Avoidance Law, extending the rules to structures that involve foreign partnerships or trusts and clamping down on “aggressive structuring using hybrids”.

In addition, Morrison also spoke about the first phase of its enterprise tax plan, which has since become law. He said the government will be adding on to the plan by backing small businesses further.

He claimed small businesses with a turnover of up to $10 million will continue to be able to immediately write off expenditure up to $20,000 for a further year.

“Small business owners are out there fighting for growth in their businesses every day. They deserve our respect and support… we will take further action to reward states and territories that cut red tape costs for small business.”

According to Morrison, the Federal Government’s previous investments in science and innovation have been “breaking ground”.

“Our plan is, to grow our economy to create more and better paid jobs, to guarantee the essentials that Australians rely on, to reduce cost of living pressures, and to ensure that the government lives within its means,” he added.

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Tags budgetfederal governmentSkilled Migration ProgramTurnbull governmentbudget 2017-18

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