Australia Personal Income Tax

Australian residents are subject to Australian tax on worldwide income. Nonresidents are subject to Australian tax on Australian-source income only. An exemption from Australian tax on certain income is available for individuals who qualify as a temporary resident. Temporary residents are generally exempt from Australian tax on foreign-source income (including foreign invest ment income but not foreign employment income) and capital gains realized on assets that are not taxable Australian property (TAP). For details regarding TAP, see Capital gains and losses.

As discussed below, the Australian tax treatment differs for resi­dents, nonresidents and temporary residents.

In general, a resident is defined as a person who resides in Australia according to the ordinary meaning of the word, and includes a person who meets either one of the following conditions:

  • He or she is domiciled in Australia, unless the tax authority is satisfied that the person’s permanent place of abode is outside Australia.
  • He or she is actually present in Australia continuously or inter­mittently for more than half of the tax year, unless the tax authority is satisfied that the person’s usual place of abode is outside Australia and that the person does not intend to reside in Australia.

The residence tests can be met relatively easily. For example, a person who is in Australia for employment purposes for as little as six months may be considered resident in Australia for tax purposes.

A nonresident is a person who does not satisfy any of the above tests.

  • The individual must be working in Australia under a temporary resident visa (for example, subclass 400 or 457; see Section E).
  • The individual must not be a resident of Australia for social security purposes (this covers Australian citizens, permanent residents, special visa categories such as refugees and certain New Zealand citizens).
  • The individual’s spouse (legal or de facto) must not be a resi­dent of Australia for social security purposes.

No time limit applies to the temporary resident status. If an indi­vidual applies for Australian permanent residency, temporary resi­dent status ends on the date on which permanent residency is granted and the individual is taxable as a resident (that is, taxable on worldwide income) thereafter.

Income subject to tax. The taxability of various types of income is discussed below. Taxable income is calculated by subtracting deductible expenses and losses from the assessable income of the taxpayer.

Employment income. Salary, wages, allowances and most cash compensation is included in the employee’s assessable income in the year of receipt. Most non-cash employment benefits received by an employee are subject to Fringe Benefits Tax (FBT), payable by the employer.

Self-employment and business income. The taxable income from self-employment or from a business is subject to Australian tax. Each partner in a partnership is taxed on his or her share of the partnership’s taxable income.

Directors’ fees. Directors’ fees are included in assessable income as personal earnings and are taxed in the year of receipt.

Dividends. The assessable income of resident shareholders in­cludes all dividends received. Franked dividends (that is, dividends paid from taxed corporate profits) paid by Australian corpora­tions are grossed up for the underlying corporate taxes paid. The shareholders may claim the underlying corporate tax as a credit in their personal tax return. Whether additional tax must be paid on the franked dividends by a shareholder depends on the indi­vidual’s marginal tax rate. Under certain circumstances, excess credits may be refunded.

Dividends from Australian sources that are paid to nonresidents are generally subject to a final withholding tax of 30% (or 15% under applicable treaties) on the unfranked portion (that is, the portion paid from untaxed corporate profits).

Foreign-source dividends are included in the assessable income of Australian residents. If tax was paid in the foreign country, a foreign income tax offset (broadly equal to the lower of the for­eign tax paid or the amount of the Australian tax payable, capped at any applicable treaty tax rates) is allowed.

Temporary residents (see Who is liable) are not assessable on foreign source investment income and gains.

Interest, royalties and rental income. Interest, royalties and rental income derived by residents are included in assessable income with a deduction allowed for applicable expenses. Eligibility for building depreciation deductions on a rental property depends on the building’s nature and its construction date.

If tax is paid in the foreign country on the foreign rental income, the resident may claim a foreign income tax offset (broadly equal to the lower of the foreign tax paid or the amount of the Australian tax payable). If the foreign investment results in a tax loss (that is, deductible expenses exceed assessable income), the tax loss can be offset against all Australian assessable income.

Temporary residents are not assessable on foreign investment income and, consequently, may not offset foreign expenses or losses against other assessable Australian income.

Interest paid by a resident to a nonresident lender is subject to a final withholding tax of 10%. Interest paid by a temporary resi­dent to a nonresident lender (for example, an overseas mortgagee) is exempt from the interest withholding tax. Royalties paid to nonresidents are generally subject to a final withholding tax of 30% (or 10% to 15% under applicable treaties).

Converting transactions denominated in foreign currency into Australian dollar amounts. Taxpayers are generally required to convert income amounts denominated in foreign currency into Australian dollar (AUD) amounts at the time of derivation of the income. Likewise, taxpayers must convert expense amounts into Australian dollar amounts at the time of payment. This also results in the deeming of assessable income or allowable deduc­tions for residents (but not temporary residents) who have acquired or disposed of foreign currency rights and liabilities. For resident taxpayers, these rules normally apply with respect to foreign-currency debt (for example, mortgages) and foreign-currency accounts (for example, bank accounts). Special rules apply to the acquisition or disposal of capital assets or depreciable assets.

Certain elections can change the amounts of assessable income or allowable deductions arising under the foreign-currency rules and/or reduce the compliance burden. However, because of the significant tax implications of the elections, taxpayers should seek specific advice suited to their circumstances.

The above rules provide limited exceptions for certain assets and obligations.

Proposed reforms to simplify these rules have been announced. However, at the time of writing, the reforms had not yet been legislated.

Temporary residents may be exempt from the above tax rules on certain foreign-currency denominated accounts that are located outside Australia.

Concessions for individuals who are considered to be living away from home. Limited tax concessions are available to employees who are required to live away from home for employment pur­poses and who maintain a home for their use in the home location in Australia. In addition, if the concessional treatment is avail­able, it is generally limited to a maximum period of 12 months. These concessions typically do not apply to foreign employees working temporarily in Australia.

 

A limited number of other benefits may be provided on a conces­sionally taxed basis to employees who are permanently relocating to Australia.

Taxation of employer-provided stock options. Discounts provided to employees on shares or options acquired under an employee share scheme (ESS) are generally included as ordinary income in the employee’s assessable income in the year they are acquired. The governing rules are complex, and professional advice should be sought.

Grants before 1 July 2009. For grants made before 1 July 2009 of qualifying shares or options, taxation may be deferred until the cessation time, which is the earliest of the following dates:

  • If the option is exercised, the date unrestricted stock is acquired or the date forfeiture conditions lapse
  • The date the share may be sold
  • The date of termination of employment
  • The end of 10 years

Alternatively, an employee may have elected to be taxed in the year of the grant.

A qualifying share or option is a share or option acquired under an ESS that satisfies certain prescribed conditions.

Grants after 1 July 2009 but before 1 July 2015. For grants made after 1 July 2009 but before 1 July 2015, the time at which tax is payable by the employee is based on the terms of the plan. The extent to which taxation can be delayed from the time of grant to the deferred taxing point depends on whether a real risk of for­feiture of the shares or options exists under the conditions of the scheme. A real risk of forfeiture exists if the employee could lose or forfeit the interest other than by disposing of it or exercising it. The taxing time is the earliest of the following events:

  • When the real risk of forfeiture no longer exists and the scheme no longer genuinely restricts the disposal of the share or exer­cise of the option
  • The date of termination of employment
  • The end of seven years

The alternative of employees electing to be taxed in the year of grant no longer exists for grants made after 1 July 2009.

Grants after 1 July 2015. For grants made after 1 July 2015, the taxing point may be deferred until the date of exercise rather than the vesting date of the shares or options. The following are sig­nificant aspects of the regime:

  • No requirement exists for shares or options to be subject to a real risk of forfeiture to enable the deferral of tax if a genuine disposal restriction applies.
  • The maximum share ownership and control level eligible for tax deferral on shares or options is 10%, with shares, options and rights counted in determining whether the 10% holding is reached.
  • The maximum deferral period for tax on shares or options is 15 years.

The taxable discount amount for shares is generally the differ­ence between the market value of the share and the amount paid for the share by the employee. For options, the discount is the greater of the following two amounts:

  • The amount equal to the share value less exercise price
  • The value determined according to a formula similar to the Black and Scholes model for valuing exchange-traded options

Other issues. Effective from 1 July 2009, Australian residents are likely to be subject to tax on the entire discount, with a foreign income tax offset for any foreign tax paid (up to the Australian tax otherwise payable). Apportionment of the discount continues for temporary residents and nonresidents.

No tax withholding obligation is imposed in Australia with respect to benefits under employee share schemes unless the employee fails to provide his or her Australian Tax File Number (TFN) to the employer by the end of the financial year.

Employers providing benefits under an ESS are required to com­ply with annual employer reporting obligations to disclose, among other items, the estimated taxable value of these awards.

Capital gains and losses. Residents (but not temporary residents) are taxable on their worldwide income, including gains realized on the sale of capital assets. Capital assets include real property and personal property, regardless of whether they are used in a trade or business, and shares acquired for personal investment. However, trading stock acquired for the purpose of resale is not subject to capital gains treatment.

Employee shares or options disposed of within 30 days of the cessation time or deferred taxing point (see Taxation of employer-provided stock options) are not subject to capital gains tax (CGT).

For an asset held at least 12 months (not including the dates of purchase and sale), only 50% of the capital gain resulting from the disposal is subject to tax.

Assets acquired before 19 September 1985 are generally exempt from CGT. In general, any gain (or loss) derived from the sale of an individual’s principal residence is ignored for CGT purposes. However, special rules may apply if the principal residence had been used to generate rental income.

Capital losses in excess of current year capital gains (before the 50% discount is applied, if applicable) are not deductible against other income, but may be carried forward to be offset against future capital gains.

Nonresidents and temporary residents are taxable only on gains arising from disposals of taxable Australian property (TAP). The following assets are considered to be TAP:

  • Australian real property
  • An indirect interest in Australian real property
  • A business asset of a permanent establishment in Australia
  • An option or right to acquire any of the CGT assets covered by the first three items above
  • A CGT asset that is deemed to be TAP as a result of the tax­payer making an election to disregard any deemed gain or loss arising on leaving Australia

 

Individuals who derive a capital gain after 8 May 2012 and are considered either a nonresident or temporary resident at any time on or after that date have a reduced ability to claim the 50% dis­count. If the individual undertakes a market valuation of the asset as of 8 May 2012, the portion of the gain that accrued before 8 May 2012 may still be eligible for the full CGT discount.

Anti-avoidance measures ensure that nonresidents and temporary residents continue to be taxable on disposals of interests in companies whose balance sheets are largely comprised of real property assets, including mining interests.

Australian residents who are not temporary residents just before breaking residence are subject to a CGT charge on the deemed disposal of all assets held at the date of breaking residence that are not TAP. The taxpayer may elect that this deemed disposal charge not apply. However, such an election deems the asset to be TAP until residence is resumed or the asset is disposed of (even if the asset would not otherwise be TAP). As a result, a CGT charge is imposed if the assets are disposed of while the indi­vidual is nonresident.

Temporary residents are generally exempt from tax on gains derived from assets that are not TAP.

Deductions

Deductible expenses. Expenses of a capital, private or domestic nature, and expenses incurred in producing exempt income, are not deductible.

Specific documentation requirements must be fulfilled for all expenses if employment-related expenses exceed AUD300 a year. Client entertainment expenses are not deductible.

Personal tax offsets. Tax offsets are available to resident taxpay­ers and temporary residents. Tax offsets are subtracted from tax calculated on taxable income.

Nonresidents may not claim tax offsets.

Business deductions. Losses and expenses are generally fully deductible to the extent they are incurred in producing assessable income or are necessarily incurred in carrying on a business for that purpose.

Specific records are required for business travel and motor vehicle expenses.

Deductions are allowed for salaries and wages paid to employees, as well as for interest, rent, repairs, commissions and similar expenses incurred in carrying on a business.

Expenditure for the acquisition or improvement of assets is not deductible, but a capital allowance may be claimed as a deduc­tion. Expenditure for acquisitions or improvements may be added to the cost base of an asset for CGT purposes and may reduce any taxable gain arising from a later disposition.

Rates. Income tax for the 2016-17 tax year (1 July 2016 to 30 June 2017) is levied on residents and temporary residents at the rates listed in the table below. The following is the table of income tax rates.

Taxable Income Exceeding AUD Taxable Income not Exceeding AUD Tax on lower amount AUD Rate on excess %
0 18,200 0 0
18,200 37,000 0 19
37,000 80,000 3,572 32.5
80,000 180,000 17,547 37
180,000 54,547 45

The 2016-17 Federal Budget announced an increase in the 32.5% personal income tax threshold from AUD80,000 to AUD87,000 effective from 1 July 2016. At the time of writing, the changes had not been legislated.

The AUD18,200 tax-free threshold is reduced if the taxpayer spends fewer than 12 months in Australia in the year of arrival or departure. Resident taxpayers may be liable for the 2% Medicare Levy (see Section B) in addition to income tax at the above rates.

Resident and nonresident taxpayers with taxable income of more than AUD180,000 per year are liable for an additional 2% Temporary Budget Repair Levy for the 2014-15, 2015-16 and 2016-17 tax years. The above rates are exclusive of the Temporary Budget Repair Levy.

Income tax for the 2016-17 tax year (1 July 2016 to 30 June 2017) is levied on nonresidents at the following rates.

 

Taxable Income Exceeding AUD Taxable Income not Exceeding AUD Tax on lower amount AUD Rate on excess %
0 80,000 0 32.5
80,000 180,000 26,000 37
180,000 63,000 45

Nonresidents are not liable for the Medicare Levy.

The above rates are exclusive of the Temporary Budget Repair Levy.

Social security

Medicare Levy. Technically, Australia does not have a social secu­rity system. However, a Medicare Levy of 2% of taxable income is payable by resident individuals for health services (provided that they qualify for Medicare services). This is the only levy imposed in Australia that is equivalent to a social security levy. An exemp­tion from the Medicare Levy may apply if the individual is from a country that has not entered into a Reciprocal Health Care Agreement with Australia.

No ceiling applies to the amount of income subject to the levy. However, relief is provided for certain low-income earners. High-income resident taxpayers who do not have adequate private health insurance may be subject to an additional 1% to 1.5% Medicare Levy surcharge. High-income taxpayers whose private hospital insurance carries an excess payment (amount for which the insured is responsible before the insurance begins to pay) of more than AUD500 for single individuals or AUD1,000 for cou­ples or families are also subject to the Medicare Levy surcharge.

 

Superannuation (pension). Australia also has a compulsory pri­vate superannuation (pension) contribution system. Under this system, employers must contribute a minimum percentage of the employee’s ordinary time earnings (OTE) base to a complying superannuation fund for the retirement benefit of its employees. The minimum percentage is currently 9.5% and is expected to remain at this percentage until 30 June 2021. In general, OTE consists of salary and wages and most cash compensation items paid for ordinary hours of work. Transitional measures can apply for certain pre-existing superannuation earnings base arrange­ments. The maximum OTE base for each employee for the year ending 30 June 2017 is AUD51,620 per quarter. No obligation is imposed to make contributions with respect to OTE above that level.

If an employee comes from a country with which Australia has entered into a bilateral social security agreement, it may be pos­sible to keep the employee in his or her home country social security system under a certificate of coverage issued by his or her home country and therefore remove the obligation to make the Australian superannuation contributions outlined above. Australia has entered into such agreements with Austria, Belgium, Chile, Croatia, the Czech Republic, Finland, Germany, Greece, Hungary, India, Ireland, Japan, Korea (South), Latvia, Macedonia, the Netherlands, Norway, Poland, Portugal, the Slovak Republic, Switzerland and the United States.

An exemption from superannuation may be available in limited circumstances for senior foreign executives who hold a certain business visa.

Tax filing and payment procedures

Returns for the tax year ended 30 June generally are due by 31 October. Extensions may be available if the return is filed by a registered tax agent. Nonresidents are subject to the same filing requirements as residents. No specific additional filing require­ments are imposed on persons arriving in, or on persons prepar­ing to depart from Australia.

A non-citizen of Australia entering the country for employment or to take up residence who has not previously applied for an Aus tralian tax file number must apply with the Australian Taxation Office.

Married persons are taxed separately, not jointly, on all types of income. Joint filing of returns by spouses is not permitted.

A tax assessment is issued by the Australian Taxation Office after a tax return is filed. For a timely filed tax return, taxpayers gener­ally have 21 days after the date of assessment to pay tax due and may be allowed a longer period.

Salary and allowances paid in Australia are subject to monthly withholding under the Pay As You Go (PAYG) tax withholding system. Income other than salary and wages, such as investment income (depending on the amount), may be subject to quarterly or annual PAYG installments.

 

Double tax relief and tax treaties

Foreign income tax offset system. An offset is available for pay­ments of foreign tax that are similar to the Australian income tax payable on the same income. Both Australian and foreign resi­dent taxpayers may claim a tax offset (equal to the lower of an equivalent foreign tax paid or the amount of the Australian tax payable) for an amount included in the taxpayer’s assessable income on which they have paid foreign income tax.

Excess foreign tax offsets may not be carried forward.

Double tax treaties. Australia has entered into double tax treaties with the following jurisdictions.

Argentina                       Ireland                           Russian

Austria                           Italy                               Federation

Belgium                         Japan                             Singapore

Canada                           Kiribati                           Slovak Republic

Chile                              Korea (South)                South Africa

China                             Malaysia                        Spain

Czech Republic              Malta                             Sri Lanka

Denmark                        Mexico                          Sweden

Fiji                                 Netherlands                   Switzerland

Finland                          Norway                         Taiwan

France                            Papua                             Thailand

Germany                        New Guinea                  Turkey

Greece                           Philippines                     United Kingdom

Hungary                        Poland                           United States

India                              Romania                        Vietnam

Indonesia

Temporary visas

Nonresidents seeking entry to Australia, including for tourism purposes, must obtain visas before entry. Individual eligibility requirements and relevant immigration legislation for each visa category must be considered before applying for a visa. Citizens of New Zealand are eligible to be granted a special category visa (permitting indefinite temporary stay with full work rights) on arrival, subject to meeting health and character requirements.

Temporary residence visas are granted to people whose activities are considered to benefit Australia, including people entering for business, skilled employment, cultural or social activities.

The types of temporary residence visas, and the conditions that must be fulfilled prior to such visas being issued, are described below. Holders of temporary residence visas are generally not eligible for public health benefits in Australia, unless Australia has a reciprocal health care agreement with the country of the visa holder.

Visitors. Three visitor visa categories (subclass 600, subclass 601 and subclass 651) allow individuals to visit Australia for the fol­lowing purposes:

  • Tourism
  • Family visits
  • Engaging in business visitor activities

Criteria that must be met include health, character and the pos­session of adequate funds for the duration of the stay. Certain eligible nationalities can apply for a visitor visa online or through a travel agent or airline. The period of stay on a subclass 600 visa is discretionary based on nationality, purpose of stay and required duration of stay. Subclass 601 and subclass 651 visas allow stays of up to three months for each entry and multiple entry.

While in Australia, individuals holding a visitor visa are autho­rized only to participate in business visitor activities and may not perform work in any capacity. Permissible business visitor activities include the following:

  • Attending business meetings
  • Participating in training, conferences or seminars
  • Investigating, negotiating or entering into contracts
  • Making general business or employment inquiries

Employment. An individual wishing to enter Australia for employment reasons may apply for a short stay activity visa, long stay activity visa or temporary work visa.

Temporary work (short stay activity) visas. Individuals who need to enter Australia to perform short-term, highly specialized work that is not ongoing, participate in an event at the invitation of an Australian organization or assist in a national emergency can apply for a subclass 400 visa. The subclass 400 visa can be granted for a period of up to six months. If the maximum period of six months is requested, a strong business case must be dem­onstrated. After grant, applicants have six months to make their first entry into Australia on this visa.

Temporary work (long stay activity) visas. The subclass 401 long stay activity visa allows individuals to enter Australia to partici­pate in a reciprocal staff exchange program, participate in a high-level sports competition, be a full-time religious worker or work full time in the household of certain foreign senior executives. Each stream has its own criteria, including sponsorship by an approved organization. This visa has a maximum stay period of two years.

Temporary work (skilled) visas. Individuals intending to work in Australia may apply for a subclass 457 visa. The subclass 457 visa is valid for up to four years and may be renewed, provided the application criteria are met each time.

The subclass 457 visa application process involves the following three steps:

  • The employer must be approved as a sponsor.
  • The employer nominates the visa holder to fill a specific position.
  • The individual completes the visa application.

Each step has separate eligibility criteria that must be met. These include business operational requirements; minimum skill and experience levels; and health, character and English language criteria.

In particular, employers must demonstrate (by meeting specific training benchmarks) that they provide for the training of their Australian employees. Employers must also attest to their strong record or commitment to employing local labor and to following non-discriminatory employment practices. In addition, employ­ers can only nominate occupations specified in legislation, and the nominated occupation must be labor-market tested unless exempt. They must also ensure that all foreign nationals are employed in Australia at market salary rates or higher rates. Business sponsors must meet several business sponsor obliga­tions with respect to all sponsored subclass 457 visa holders (and any accompanying family members). The immigration depart­ment monitors all sponsors, and sanctions are imposed on spon­sors that do not meet their sponsorship obligations.

Working Holiday. Under reciprocal arrangements with certain countries, young people may work in Australia to support their holiday on Working Holiday visas. Working Holiday visas are granted to individuals 18 to 30 years of age who are nationals of Belgium, Canada, Cyprus, Denmark, Estonia, Finland, France, Germany, the Hong Kong SAR, Ireland, Italy, Japan, Korea (South), Malta, the Netherlands, Norway, Sweden, Taiwan and the United Kingdom.

Individuals holding Working Holiday visas may work within Australia only if the work is incidental to their vacations. The Working Holiday visa is valid for 12 months, and the holder may not work for more than six months with any one employer. Working Holiday visa holders who have completed three months’ seasonal work in regional Australia may be eligible to apply for a second Working Holiday visa.

Work and Holiday. The Work and Holiday visa is similar to the Working Holiday visa described above but has its own individual eligibility requirements. This visa is available to passport holders of Argentina, Bangladesh, Chile, China, Indonesia, Malaysia, Poland, Portugal, Slovak Republic, Slovenia, Spain, Thailand, Turkey, the United States and Uruguay.

Training and research. Employers may nominate individuals under the training stream to engage in structured workplace-based training in Australia. The training must be consistent with the individual’s employment history and provide skills the indi­vidual will use after returning to his or her home country. The employer must also apply for and be granted by the immigration department the status of training and research sponsor. Visiting academics are also eligible for this visa under the research stream.

Entertainment. Australia’s entertainment visa, subclass 420, allows performing artists to stay temporarily in Australia. People who perform on stage, on screen, before a microphone or in concert are considered entertainers. Nonperforming production and technical crew may also be eligible for a subclass 420 visa.

Investor retirement. The investor retirement visa is intended for persons who meet the following criteria:

  • They are of retirement age.
  • They have no dependents other than a spouse.
  • They have sufficient net assets and undertake to make a sig­nificant investment in state or territory government bonds.
  • They have the minimum net income.
  • They are sponsored by an appropriate regional authority of a territory or state government.
  • Their presence in Australia will be without cost to Australia’s social and welfare services.

 

The investor retirement visa application must be supported by the government of the state where the individual intends to reside. Consequently, individuals must check with the relevant state government body regarding its specific requirements. Holders of the visa may work for up to 40 hours a week.

Students. Overseas students enrolled in registered courses may reside in Australia for the duration of their courses. Overseas students may work in Australia 40 hours per fortnight, and they may work full-time during college or university breaks.

Overseas students in Australia can apply for a subclass 457 visa for full-time employment without having first completed their studies in Australia if they meet the criteria. Citizens of New Zealand may also be eligible for specific streamlined permanent residence visa arrangements.

Permanent residence

Permanent residence visas are granted in the family, humanitari­an and skilled categories. The visas most relevant to individual skilled applicants and business immigrants are described below.

Employer Nomination Scheme. Under the Employer Nomination Scheme, Australian employers may nominate highly skilled indi­viduals from overseas for permanent residence. Applicants for a permanent residence visa under the Employer Nomination Scheme must satisfy one of the following criteria:

  • They have worked in their nominated position in Australia for their nominating employer while on a subclass 457 visa for at least two of the last three years immediately before applying.
  • They have three years post-training experience in the nominat­ed occupation and have their skills formally assessed by a specified skills-assessing body in Australia.
  • They are nominated for a senior management position that attracts a base salary of more than AUD180,000.
  • They hold a subclass 444 (special category) visa or subclass 461 (New Zealand family relationship) visa and have worked in their nominated occupation for their nominated employer for at least two of the last three years immediately before applying.

Permanent residence applications may also be filed under the Regional Sponsored Migration Scheme, which has more flexible eligibility requirements.

General skilled-points test. Individuals may apply for permanent residence on the basis of their skills for an occupation specified in the Skilled Occupation List. Individuals intending to apply must first lodge an expression of interest outlining their claims for points for employability factors, including qualifications, age, employment experience and language capabilities. Sponsorship from eligible relatives (who are Australian citizens or Australian permanent residents) or state governments attracts additional points. Only those scoring the most points are invited to submit a visa application. The number of invitations issued in each occu­pation is limited by quotas.

Business Innovation and Investment Program. The categories in the Business Innovation and Investment Program are designed for successful businesspersons who wish to manage their own business or make substantial investments in Australia. Individuals intending to apply must first file an expression of interest. Their business skills and other attributes are then assessed under a points test (excluding applicants applying for the Significant Investor and Premium Investor streams). Only the highest-scoring individuals are invited to submit a visa applica­tion. Most Business Innovation and Investment visa holders enter Australia initially on a provisional (temporary) visa for four years. If they provide satisfactory evidence of a specified level of business activity for two years or investment for four years (or at least one year for the Premium Investor stream), they may apply for permanent residence.

Investor stream. The Investor stream is designed for investors who want to make a designated investment of at least AUD1,500,000 in an Australian state or territory on an ongoing basis. Applicants must secure state or territory nomination, meet the innovation points test and provide evidence of skill and expe­rience in managing a qualifying investment.

Business Innovation stream. The Business Innovation stream is designed for businesspersons seeking to own and manage a new or existing business in Australia. Applicants must meet the inno­vation points test, and evidence ownership, skill and experience in managing a business generating annual turnover of at least AUD500,000 in at least two of the preceding four fiscal years.

Significant Investor stream. Under the Significant Investor stream, individuals must file an expression of interest and receive a nomination from a state or territory government before they are eligible to apply for a visa.

Individuals must be able to demonstrate a capacity to invest AUD5 million into a “complying investment,” which consists of the following:

  • At least AUD500,000 in venture capital and growth private equity funds that invest in start-ups and small private companies
  • At least AUD1,500,000 in approved managed funds investing in emerging companies listed on the Australian Securities Exchange (ASX)
  • Up to AUD3 million in a balancing investment of eligible assets that include ASX-listed companies, eligible corporate bonds or notes and real property with a 10% limit on residential real estate

The Significant Investor visa does not attract a points test or have maximum age requirements; it also allows the dependent chil­dren or partner of the primary visa holder to work or study in Australia. Individuals applying for this stream may also maintain business interests overseas. As a result, visa holders are required to remain in Australia for only an average of 40 days per year over a four-year period to meet residency criterion for permanent residence.

 

Premium Investor stream. Individuals in the Premium Investor stream must be invited by Austrade and invest at least AUD15 million in a “complying investment,” which includes the following:

  • Australian securities exchange-listed assets
  • Australian government or semi-government bonds or notes
  • Corporate bonds
  • Australian proprietary limited companies
  • Real property in Australia excluding residential property
  • Deferred annuities issued by Australian registered life companies
  • State or territory government-approved philanthropic contri­butions

Individuals may be invited by the Australian government to apply for a permanent visa in the Premium Investor stream after hold­ing a provisional visa and complying investments for at least one year.

Entrepreneur Visa. A new Entrepreneur Visa is expected to be in place from November 2016. This temporary visa will be designed to attract overseas talent with innovative, high-growth potential business concepts and financial backing from a third party. Entrepreneurs who succeed in Australia will be eligible for per­manent residence in Australia.

Partner program. Spouses (including de facto and same-sex spouses) of Australian citizens or Australian permanent residents may apply for permanent residence through sponsorship by their Australian spouse. In most cases, applicants are issued a two-year temporary visa that converts to permanent residence if the part­ner relationship is ongoing after the two-year period.

Family and personal considerations

Family members. Spouses (including de facto and same-sex spouses) and dependents of temporary and permanent visa applicants are generally included in the same visa application as the primary applicant and granted a visa of the same subclass. Family mem­bers who are not included in a temporary resident’s initial visa application may generally apply for a visa at a later date.

Same-sex couples are not eligible to marry in Australia. Same-sex spouse relationships (married or unmarried) are recognized in the same way as de facto spouse relationships.

If sponsorship or nomination is a requirement for the primary applicant, spouses and dependents must be included in the spon­sorship or nomination.

Driver’s permits. Foreign nationals who are in Australia temporar­ily may drive legally in Australia using their home country drivers’ licenses. In most states, an individual who becomes a resident must obtain an Australian driver’s license. To obtain an Australian driver’s license, the applicant must take a computer­ized knowledge test, followed by a physical driving test.