Senate Passes Skilling Australians Fund Legislation

On Tuesday May 8, the Australian government successfully passed two bills through the Senate that ratified the proposed Skilling Australians Fund legislation (SAF) into law.

The successful passing of the Migration (Skilling Australians Fund) Charges Bill 2017, and the Migration Amendment (Skilling Australians Fund) Bill 2018 will see an estimated $1.5 billion made available—with matched funding from the state governments—to support up to 300,000 new apprenticeships, traineeships and other employment related training.

The revenue for the fund will be provided by a tax levy imposed on employers who sponsor foreign workers on certain visa types, including:

  • Temporary Skill Shortage (TSS) visa.
  • Employer Nomination Scheme (ENS) (subclass 186) visa.
  • Regional Sponsored Migration Scheme (RSMS) (subclass 187) visa.

The introduction of the SAF will replace the previous Training Benchmarks, which required visa sponsors to demonstrate that they had spent at least 1% of their payroll on training local staff over the last three years.

Employers looking to sponsor foreign workers will now need pay the following fees to the Department of Home Affairs:

  • Businesses with an annual turnover of less than $10 million.
    • An upfront annual payment for each employee sponsored on a TSS visa of $1,200.
    • A one-off payment for each employee sponsored on a permanent ENS or RSMS visa of $3,000.
  • Businesses with an annual turnover that exceeds $10 million.
    • An upfront annual payment for each employee sponsored on a TSS visa of $1,800.
    • A one-off payment for each employee sponsored on a permanent ENS or RSMS visa of $5,000.

A spokesperson for the Department of Home Affairs has announced that the new nomination training contribution charge will be capped at $8,000 for temporary work visas. There will also be no pro-rata provision payments of the charge for parts of a financial year.

Two important amendments to the bill were additionally agreed to in the Senate debate, including:

  • Labour market testing must not be conducted more than four months before the nomination is lodged, while advertising must extend to four weeks, rather than the current 21 days.
  • The establishment of an independent review of the operations of the SAF program to be conducted as soon as possible after an 18-month period has passed from the date of Royal Assent. The review is to be undertaken and completed within six months.

Further refund provisions have also been added to the legislation for the SAF levy. In addition to the existing refund provisions in place for refusal of sponsorship applications, refunds for the tax levy will also be officially made available in the following circumstances.

  • The applicant’s sponsorship and visa applications have been approved but the visa holder fails to commence work with their employer.
  • A TSS visa holder leaves their job within 12 months of commencing employment. In this scenario a refund will only be provided for the full unused years of the levy, if the visa period is longer than 12 months.
  • An employer’s sponsorship application has been approved, but the employees visa application is declined on health or character grounds.

The Department of Home Affairs have also announced that religious organisations will be exempt from paying the SAF tax levy for either the TSS (subclass 482) or ENS (subclass 186) visa, under the Minister of Religion Labour agreement.

This amendment is expected cost the SAF up to $105.1 million over the forward estimates period, with the Government pledging to provide $1.8 million in funding to the Department to help implement the new measure.

However, the equivalent amount will also be deducted from the revenue that is to be made available for payments to the State governments through the SAF.

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