TSMIT and Annual Market Salary Rate | Complying with salary requirements
When sponsoring overseas workers, salary compliance with Australian migration laws is an important obligation to consider. To remain compliant and steer clear of costly nomination refusals, employers generally need to*:
- Ensure sponsored visa holders receive a salary of at least $70,000 per annum, as per the new TSMIT (Temporary Skilled Migration Income Threshold) from 1 July 2023 and;
- Ensure remuneration aligns with what an Australian worker would earn for the same role and location—the Annual Market Salary Rate (AMSR).
But calculating this isn’t without its challenges and for some employers, the increase in the TSMIT may add another layer of complexity to the already intricate process.
Here’s what you should know about complying with salary requirements such as the TSMIT and the AMSR when sponsoring visa holders for the TSS 482 Visa, 186/187 Permanent Residence Visas and the 494 Regional Visa.
- How do you determine the AMSR if there is an Australian equivalent employer?
- What if your organisation has no equivalent Australian worker?
- Are there any flexibilities to the TSMIT and AMSR?
- Do non-monetary benefits count?
- What about flexibilities for employees on a pathway to Permanent Residence (PR)?
- Does the TSMIT apply to overseas workers engaged through a Labour Agreement?
- Can job advertisements that reflected the previous TSMIT still be used for Labour Market Testing?
- Can employers access a refund for the Skilling Australians Fund (SAF) if a Nomination is withdrawn or refused for not meeting the new TSMIT?
*Where the nominee will be paid $250,000 or more, sponsors do not need to demonstrate AMSR, but for positions earning less than that amount, the AMSR and TSMIT must be satisfied.
How do you determine the Annual Market Salary Rate (AMSR) if there is an Australian equivalent employee?
If your company has an Australian employee in the same position and location as your visa candidate will work, the Annual Market Salary Rate is determined by what you are paying this worker.
If the worker’s salary is based on an enterprise agreement or industrial award, you should refer to:
- The relevant enterprise agreement or award
- The salary level and earnings of the position
In cases where there is no relevant agreement or award, or your Australian employees are paid above the award or agreement rate, you should refer to the employment contracts of the equivalent Australian, such as:
- Employment contracts
- Pay slips
The annual earnings of the equivalent Australian worker is the AMSR in this circumstance.
Whether an Australian worker is in an equivalent position is generally determined by the position and responsibilities. Sometimes it is appropriate to consider the years of experience and skills of the employee and we generally recommend advice should be sought in such circumstances.
What about determining the AMSR if the company has no equivalent Australian worker?
When there is no equivalent Australian worker in your organisation, an enterprise agreement or industrial award could be used to determine the Annual Market Salary Rate.
You should refer to:
- Details of the relevant agreement or award
- The relevant salary level and earnings or occupation group for the position
In cases where there is no agreement or award, you should determine the AMSR by utilising relevant information – for example, at least two of the following:
- Labour Market Insights website (formerly Job Outlook information)
- Eligible advertisements for equivalent positions in the same location from the past six months (considering factors such as states, and metropolitan / regional areas)
- Remuneration surveys conducted by reputable organisations
- Written advice from unions or registered employer associations
Are there any flexibilities to the TSMIT and Annual Market Salary Rate? Do non-monetary benefits count?
All new Subclass 482 visa applicants must have guaranteed earnings of at least $70,000, comprised of monetary benefits to meet the TSMIT.
The Government is aware that the recent TSMIT increase will exclude some workers from visa sponsorship that would previously have been eligible, but the increase was considered essential because of the cost of living in Australia for temporary visa holders who do not necessarily have access to Medicare and other supports.
Calculating the AMSR, when it is above TSMIT, does allow some flexibility for inclusion of guaranteed non-monetary benefits such as:
- Amounts that count as guaranteed monetary earnings for an equivalent Australian worker, such as guaranteed overtime amounts
- The agreed value of non-monetary benefits such as accommodation or a car do not count towards salary compliance with the TSMIT – however, where the AMSR exceeds the TSMIT, the value of non-monetary benefits may be eligible in the calculation of the AMSR. A few conditions of this are that:
- There should be no concerns that non-monetary benefits are being used to artificially enlarge the salary of a lower-skilled occupation
- The AMSR must be determined by the guaranteed annual earnings of an equivalent Australian worker
- Overseas workers with the same experience cannot be paid less than Australian workers in the same position
What about flexibilities for employees on a pathway to Permanent Residence (PR)? | Non-monetary benefits
The Government has recognised that the increase to the TSMIT may impact TSS 482 Visa holders on a pathway to PR through the Subclass 186 Temporary Residence Transition Stream Visa.
It has therefore stated it may allow non-monetary benefits to count towards the AMSR for the Subclass 186 Visa Temporary Residence Transition stream until 31 December 2023 and it notes the following points:
- This applies to the calculation for the AMSR only. The actual guaranteed monetary earnings of the nominated worker would still need to be at least the TSMIT excluding non-monetary benefits.
- Employers will also need to show the same salary package applies to an equivalent Australian worker.
- Cases will be carefully considered by the Department of Home Affairs to ensure workers are not offered non-monetary benefits that are not genuine.
Does the TSMIT apply to overseas workers engaged through a Labour Agreement?
Yes – the new $70,000 TSMIT applies to Labour Agreement nominations lodged from 1 July 2023. However, any existing TSMIT concessions still apply, given that concessions are usually conducted as a percentage reduction to the TSMIT rate relevant at the time of nomination lodgement.
For example, salary concessions of up to 10% for the previous TSMIT of $53,900 had been at a minimum salary of $48,510, but from 1 July 2023 the same TSMIT concession for new nominations equate to a minimum salary of $63,000 under the new TSMIT of $70,000.
An exception to this is that the increased TSMIT may not apply to Aged Care Industry Labour Agreements, as they include a specified salary in dollars rather than a concession rate.
Can job advertisements that reflected the previous TSMIT still be used for Labour Market Testing?
The increase in the TSMIT on 1 July 2023 has not changed the way in which an employer should undertake Labour Market Testing (LMT) (a process of meeting specific requirements to locally advertise a position before sponsoring a skilled migrant).
Employers still need to ensure the advertised salary in the LMT is the same as the salary for the nominated position. If job advertisements reflect the old TSMIT of $53,900 but the nominated salary meets the new TSMIT of $70,000 then LMT will not be met and the position would need to be re-advertised.
Can employers access a refund for the Skilling Australians Fund (SAF) Levy if a Nomination did not meet the new TSMIT?
Unfortunately, no – employers cannot receive a refund for the Skilling Australians Fund (SAF) levy if a nomination application for an overseas worker was refused due to the nominated salary being less than the TSMIT.
Other FAQ’s on complying with the TSMIT
For more FAQ’s on how to comply with the new TSMIT and its impact on new and existing visa holders in your organisation, you can read our article here. Other FAQ’s include:
- Does the new TSMIT apply to existing visa holders as well as new applicants?
- What about employees that earn less than the new TSMIT of $70,000 and need their visa renewed after 1 July 2023?
- How does the increased TSMIT impact the hospitality, retail and agriculture industries?
Interstaff | TSMIT and Annual Market Salary Rate
As always, if you require professional visa or migration advice, we encourage you to contact Interstaff’s Migration Agents on 08 9221 3388 (Perth), 02 7200 2567 (Sydney), 03 8319 0902 (Melbourne), +61 8 9221 3388 (International) or get in touch here. You may also wish to connect with us on LinkedIn to keep up-to-date on these changes.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.