Australia: Increase in Age Limit for Working Holiday Visa Applicants from Canada and Ireland

Insights from Global Mobility

Australia: Increase in age limit for working holiday visa applicants from Canada and Ireland

November 5, 2018

In brief The Australian and Canadian Governments reached an agreement in late August 2018 to increase the upper age limit for eligible citizens of both countries wishing to obtain either an Australian Working Holiday Visa (WHV) or an International Experience Canada (IEC) visa.

A new legislative instrument recently has been released confirming that from November 1, 2018, Canadian and Australian citizens between the ages of 18 and 35 will be eligible to travel and work in the reciprocal country due to amendments made to the existing Memorandum of Understanding between the two countries, which governs Youth Mobility.

The legislative instrument also confirms that this new upper age limit will apply to the reciprocal agreement between Australia and Ireland, and will apply equally to applications for first or second Working Holiday visas.

In detail individuals who hold an agreement with Canada, Background equivalent visa in each Australia is the only participating country can seek participating country in Australia currently has 19 work for a limited time in order Canada’s IEC to receive an Working Holiday (Subclass 417) to ‘supplement’ travel funds. unlimited supply of IEC work visa reciprocal agreements in permits, with all other countries place and 22 agreements for the Assessment criteria being subject to an annual Work and Holiday (Subclass For participating countries quota. 462) visa. These agreements overseas, the eligibility criteria provide Australian citizens aged can be variable; however for Further beneficial amendments 18 to 30 (or 18 to 26 for the individuals seeking entry to may be agreed in the future and Czech Republic) an opportunity Australia, the application and the Department of Home Affairs to live, travel, and work in a assessment criteria is generally only will comment on participating country for a reasonably uniform with this these after an agreement has period of up to 12 months. As increased age limit for Canadian been reached. with the Subclass 417 and 462 and Irish citizens being the first visas, the intention is that of its kind. In the context of the

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Tax treatment for people holding eligible for a tax-free threshold of up benefits, the Departing Australia WHVs to $18,200 per annum and then 19% Superannuation Payment (DASP) is Although this is good news for many on the balance up to $37,000. As a taxed at 35% (in addition to the would-be travellers, it is important to result, WHVs pay at least $1,978 per contributions tax and other taxes paid note that Australia applies slightly annum more than other temporary through the fund). For WHV holders, different tax treatment to people resident visa holders. Taxable income the DASP tax rate is 65%. holding WHVs, resulting in a higher in excess of A$37,000 is taxed at the overall Australian tax liability same resident tax rates for all visa The takeaway compared to people coming in to holders. Employers and WHV holders should Australia on other types of visas. In addition, employers are required to take note of the age limit increase, as well as ensure that they consider the In particular, holders of WHVs are contribute to Australian superannuation for WHVs same as for different tax treatment and costs for taxed at a rate of 15% on the first WHVs working in Australia. A$37,000 per annum of income as other visa holders. However, when compared to other visa holders who, other visa holders depart Australia as tax residents of Australia, may be and withdraw their superannuation

Let’s talk For a deeper discussion of how this issue might affect your business, please contact your regular Global Mobility Services engagement team or the following team members:

Global Mobility Services – Australia

Carter Bovard, Melbourne Stacey Tsui, Sydney Annalisa Symons, Melbourne +61 (3) 8603 1879 +61 (2) 8266 0734 +61 (3) 8603 1418 [email protected] [email protected] [email protected]

Sarah Pettit, Perth Arathi Tekkam, Sydney +61 (8) 9238 3077 +61 (2) 8266 0117 [email protected] [email protected]

Global Mobility Services – United States Peter Clarke, Global Leader +1 (646) 471-4743 [email protected]

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This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.

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