The 457 visa is the most commonly used program for Australian or overseas employers to sponsor skilled overseas workers to work in Australia temporarily. Holders of this visa may be employed for a period of between one day and four years and may bring any eligible family members, who have unrestricted work and study rights in Australia. Holders of the Subclass 457 visa have no limit on the number of times they travel in and out of Australia.
Tax Tips and Traps
There are a range of benefits that a 457 visa holder can enjoy. For example, 457 visa holders may be entitled to receive a Living Away From Home Allowance (LAFHA) in respect of food and / or accommodation costs they incur whilst living in Australia. There are a number of eligibility requirements and Majenda can advise on how to maximise LAFHA whilst complying with Australian tax laws.
457 visa holders can also receive a Medicare Levy exemption if they meet certain criteria. As most 457 visa holders are not eligible to receive a Medicare card, it seems reasonable that they should not have to pay the 1.5% Medicare Levy. However, receiving the exemption is not automatic. 457 visa holders must apply for the exemption prior to submitting their annual Australian tax return.
Taxpayers who are resident of Australia for tax purposes are usually taxed on their worldwide income. However, there is a special exemption for 457 visa holders such that their overseas income is not subject to tax in Australia. This exemption provides tax planning opportunities that a 457 visa holder should consider.
457 visa holders can apply for a refund of their superannuation investments when they return to their home country, but an exit tax will apply. Majenda can assist 457 visa holders with the process of obtaining a refund of Australian superannuation.
457 visa holders can convert to permanent resident status. However, for some people there may be significant tax implications for making such a move. Professional tax advice should be sought by anyone who is considering converting from a 457 visa to a permanent resident.