Australia operates in a very competitive market for tourists, students and skilled workers, and relies heavily on the ‘lifestyle’ card to sway international workers. Across all industries and at all levels of employment – from CEOs to backpackers – businesses are looking to this year’s Federal Budget for incentives to make working in Australia more attractive. In a COVID-19 world where people are less willing to travel far away from friends and family for extended periods, what could the Minister for Immigration be doing to relax travel and immigration laws, and create opportunities for a successful global mobility model?
Increased accessibility for Working Holiday Visa holders
For backpackers and tourists on a Working Holiday Visa, Australia has always been an exciting place to travel with plenty of work in hospitality, tourism, transport and agriculture. All these industries have suffered at the hands of COVID-19 with businesses struggling to stay in operation from a lack of available staff.
As introduced by the current Government in 2017, backpackers or those working on a Working Holiday Visa are taxed at 15 per cent from dollar one (they are entitled to receive any superannuation payments refunded at the end of their stay, but this will be to exorbitant rates of taxation). There are certain countries whose visitors are potentially exempt from this tax as the High Court ruled last year in a discrimination case including the UK, Chile, Finland, Japan, Norway, Turkey, Germany and Israel. While the US also has a non-discrimination clause in its treaty with Australia, it is not legally enforceable. It will be interesting in this year’s Budget if we could see taxes reduced to lure backpackers back into the country to work in these sorely affected industries and help ease some of the inflationary pressures stemming from mass human resource shortages.
Encouraging skilled migration
At the other end of the employment market, the low Australian dollar, high cost of living, and fewer opportunities for growth have been compacted with the additional issues COVID-19 has presented. These include our isolated location resulting in long-haul travel, making it even more challenging to entice skilled workers to move to Australia for work. We compete with the US, the UK and more locally, China for acquiring top talent from around the world to fill specialist roles across industries that would improve possibilities for domestic expansion.
The concessionally taxed Living Away From Home Allowance (LAFHA), which provided compensation such as rental assistance for people who needed to move from their primary residence in order to do their job, was a major drawcard for Executives and skilled workers. This was, however, withdrawn by the Labor Government in 2012 for foreign executives. As the current Government looks for ways to interest international skilled workers to consider moving to Australia, bringing back LAFHA to combat the high income tax rate could be a successful remuneration structure to attract Executives to make the move. Further cutting of administrative red tape would also be a welcome move for businesses seeking to on-board foreign labour.
Supporting return to work
In addition, the Government could increase initiatives for women and families to boost women’s participation rates in the workforce and combat staff shortages. OECD data shows Australia ranks 28 out of 42 countries for maternal workforce participation, and by increasing spend on childcare and support in this Budget, the Government could empower women to return to work, take on more hours and advance. By extending paid parental leave nationally it will encourage more flexibility for women in the workplace and greater sharing of caring responsibilities either at home or through third party caring arrangements. Our Government could look at other developed nations within the region to consider lateral support in the form of migration to encourage greater female participation in the workforce.
Remote work
In the world of remote work, there is a lot of risk coming from Federal and State agencies, where employers may not share locations or have sophisticated infrastructure to support remote work options. We would like to see Government taking steps to streamline the administration burden associated with flexible work arrangements such as technology rebates for businesses.
To help you encourage global mobility and deliver efficient solutions for employees, we can help you achieve better tax outcomes and leverage investment announced on Budget night. From structuring your business tax effectively to avoid over-paying, minimising risks and compliance issues, and facilitating flexible work arrangements across different jurisdictions – we can help bring clarity and you help manage tax across borders.
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