In November 2019, the government released new skilled visas encouraging migrants to settle in regional Australia. As you would be aware by now, the two new temporary visas – subclasses 494 and 491 –replaced previous regional skilled visas. The new visas offer a clear pathway towards permanent residence (subclass 191).
Focus on the pathway to Permanent Residence for subclass 494 visa holders
As we approach the release of the Regional Permanent Residence visa (subclass 191) in November 2022, let’s make sure current and future subclass 494 visa holders are on the right track towards meeting Permanent Residence requirements. To summarise, the main subclass 191 requirements are:
- Lived and worked in a designated regional area; and
- Held a subclass 494 for at least 3 years; and
- Met the income requirements for the period
The first two items are simple – they require the visa holder to maintain employment sponsorship (or multiple sponsorships*) in a regional area for at least 3 years. However, the income requirement needs a little more investigation.
Legislation for the subclass 191 visa has been released but not commenced. The relevant section regarding the income requirement reads:
191.214
(1) The applicant has provided copies of notices of assessment, and any notices of amended assessments, given to the applicant under the Income Tax Assessment Act 1936 in relation to 3relevant income years for the applicant.
(2) The applicant’s taxable income for each of those relevant income years is at least equal to the amount specified in an instrument under subclause (3) in relation to the applicant.
(3) The Minister may, by legislative instrument, specify an amount for the purposes of subclause (2) in relation to all applicants or different classes of applicants.
Income year
Clause 191.214(1) refers to ‘3 relevant income years for the applicant’. What is an income year? Let’s investigate further.
To understand taxation terminology, we need to refer to the Income Tax Assessment Act 1997. To be clear, I am not a licensed taxation/ financial advisor, the following is merely a reproduction of publicly available information.
The Act defines ‘income year’ as:
· The income year is the same as the financial year
…and
· "financial year" means a period of 12 months beginning on 1 July.
Taxable income
Clause 191.214 (2) refers to ‘the applicant’s taxable income for each of those relevant income years’. So what is ‘taxable income’?
The Income Tax Assessment Act 1997 gives a formula for calculating ‘taxable income’:
Section 4.15
Work out your taxable income
(1) Work out your taxable income for the income year like this:
Taxable income = Assessable income - Deductions
Specified Amount
Clause 191.214 (3) refers to a specified amount of taxable income to meet the threshold requirements. This specified amount will be set out in a legislative instrument, that has yet to be released.
Although the legislative instrument has not been released, we can still make an educated guess of the 'specified amount'. The baseline requirement for grant of a subclass 494 is the “market salary rate” – which is the TSMIT for TSS (482) visas, i.e. AUD 53,900 base per annum.
It would be a surprise if this market rate is altered at the permanent residence (subclass 191) stage. However, the number one rule in migration law is to expect the unexpected!
So what?
You are probably asking yourself by now, so what? Surely if I am granted a subclass 494, the salary proposed in that application will be enough to meet the permanent residence (subclass 191) requirements?
Maybe. Maybe not.
Let’s consider the following scenarios which may be of assistance to subclass 494 visa holders.
Scenario 1 – salary close to market salary & deductions
- Subclass 494 visa holder. Visa granted on 1 July 2020.
- Nominated salary AUD 55,000.
- Visa holder lives, works in regional area as per conditions on the subclass 494.
- At the end of each financial year, the visa holder consults with an Accountant, who advises of a range of allowable deductions, such as work tools, uniforms, etc.
- Taxable income (after deductions) for financial year 2021 becomes AUD 53,500.
In seeking allowable deductions to reduce their tax liability, the visa holder has fallen below the ‘taxable income’ at an ‘amount specified’ for the purpose of the subclass 191 visa requirements.
Scenario 2 – unpaid leave, downtime due to unforeseen events
- An unforeseen event, for example the COVID-19 pandemic, has caused the visa holder to be stood down for 3 months, without pay.
- Alternatively, the visa holder needs to travel overseas for an urgent personal reason, and the visa holder's taxable income suffers as a result.
The result is that the visa holder may fail to meet the income requirements for the period.
Scenario 3 – mid-financial year subclass 494 grant
- Subclass 494 visa holder. Visa granted on 1 December 2020.
- Visa holder lives, works in regional area as per the conditions on the subclass 494.
If the nominated salary is closer to the market salary rate, for example AUD 60,000 it may be the case that the visa holder needs to work longer than 3 calendar years to meet permanent residence (subclass 191) requirements. In such a case, the period of 1 December 2022 to 30 Jun 2021, the visa holder will not likely meet the specified amount for that particular income year. The visa holder may then need to work for 3.5 calendar years.
If the applicant is a high salary earner, for example, AUD 150,000, in the same period (1 December 2020 to 30 June2021), the visa holder would likely have earned more than AUD 53,000 during that period. In which case the high salary subclass 494 visa may be able to use a partial financial year taxable income, as long as a minimum 3 calendar years has passed before applying for Permanent Residence.
‘Take-home’ messages
As the holder of a subclass 494 visa, you need to be careful regarding your taxable income. Particularly if your salary is close to the TSMIT (AUD 53,900), you need to be aware of the impacts of:
- Claiming tax deductions at the end of each financial year
- Unpaid leave/ periods of downtime from work during unforeseen events
In these cases, you may need to spend more that 3 years as the holder of a subclass 494 visa before you are eligible for Permanent Residence (subclass 191). For those subclass 494 visa holders on high salaries, you may be eligible for Permanent Residence (191) at exactly 3 years as the holder of a subclass 494.
In either situation, it is an excellent idea to have your eligibility assessed by a registered migration agent to make sure you have met the relevant requirements for grant of a subclass 191 visa.
Photo by Phillip Flores on Unsplash
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The information provided in this article or anywhere on this website is of a general nature, it does not relate to your specific circumstance. This general information must not be used to form any assessment or opinion on individual visa eligibility. For an individual assessment you must contact us for a consultation session to confirm if you are eligible for any visa.
