The ATO and DIAC will share data about temporary residents.

The Australian Taxation Office is set to target visa holders in a massive investigation into fraud and tax infringements.

The details of around one million temporary international workers will be analysed to pinpoint potential fraud amongst the holders of 27 different types of visa.

“Records relating to approximately 1,000,000 individuals who were granted visas under the above subclasses will be matched,” the ATO said in a government gazette notice.

“The ATO may also provide information to assist the Department of Immigration and Citizenship to maintain the integrity of the student and temporary working visa programmes. The ATO is legally able to provide this information.”

Tax authorities are collecting the names and addresses and other details of visa holders on a range of permits including the the 457 visa, the working holiday visa and the various student visas.

Other visa classes being targeted include the entertainment visa (Subclass 420), sport visa (Subclass 421) and the temporary medical practitioner visa.

The ATO will collect the data for the period starting January 1, 2012 to June 30, 2014 from the Department of Immigration and Citizenship (DIAC). This will then be electronically matched with certain sections of ATO data holdings.

The ATO have called the drive the ‘Department of Immigration and Citizenship Temporary Working Visas Data Matching Programme’.

The ATO wants to improve intelligence on the level of tax compliance by employers and visa holders. They claim it will “improve existing risk detection models”, “identify potentially new or widespread refund fraud methodologies” and allow them to “take steps to mitigate threats of non-compliance and fraud”.

The ATO also expect the programme to allow them to implement strategies that will “address the identified risks posed by temporary working visa holders and employer sponsors”.

The data trawl will include information about migration agents, the education institute where the person plans to study and details on all international travel movements by the visa holder.

A spokeswoman for Immigration Minister O’Connor told the Irish Echo that people on 457 visas are not being specifically targeted and that everyone on a temporary visa will be looked at.

“It’s about ensuring people who are here are working the hours they are supposed to be working and paying the appropriate levels of tax,” she said.

On the issue of DIAC supplying the ATO with information on temporary workers she explained that “it is normal for government departments and agencies to work together”.

Care manager Karen O'Brien estimates the loss of LAFHA decreases her annual income by $17,000.

Some temporary residents say they are feeling the pinch after losing access to a tax perk for overseas workers.

The federal government had announced a three month reprieve to living away from home allowance (LAFHA) reforms in June, just three days before all temporary residents were set to lose access to the tax perk.

The new eligibility rules took effect on October 1, after they had passed through the Senate on September 19.

Geoffrey Nathan was among the recruitment firms to offer the perk, as apart of salary packaging measures.

Its general manager, Lisa Harrison, said in some cases the company is looking at other salary packaging possibilities, such as the reimbursement of work expenses.

She said many companies already do this.

“We know that people are experiencing a bit of financial hardship because they would have got used to receiving the LAFHA and now are not able to, so that has been a concern,” she said.

This month has seen many Irish workers receive their first pay packets since the change.

Shauna Perry, from Rathfarnham in Dublin, works as a digital account manager with Traction Digital in Sydney and has been in Australia since April 2010.

The 29-year-old said the loss of LAFHA will make living in the New South Wales capital more expensive.

“It’s only been effective for me since October 15. That’s the most recent salary slip I’m after getting and not including the LAFHA it was a big hit,” she said.

“The majority of people are about $800 or $900 down a month. It’s definitely noticeable so I can already see it’s going to be tight this month”

Ms Perry said the government had been very weak in “communicating the change” to people.

“Sydney is so expensive. The rents haven’t come down. You’re trying to keep up with the high spending in Sydney when you’re $900 out of pocket,” she said.

“I think what makes it particularly hard for Irish people is that you don’t have the Medicare and you’re going to the doctor and paying full whack … there’s no rebate that you’re getting back on that.”

The loss of income also means, in her view, it is no longer pragmatic to visit family in Ireland once a year.

Karen O’Brien, from Blarney, Co Cork, moved to Sydney with her fiancé in May this year, the same month that changes to the tax perk were first signalled in the federal budget.

Ms O’Brien, 32, works for an international healthcare company as a care manager and had been receiving LAFHA as part of her sponsorship.

She said at least 60 per cent of the company’s staff are from overseas and there was ‘a bit of a backlash’ when the changes were announced.

This led the company to offer to nominate staff for employer-backed permanent residency and to contribute $4,000 to their application costs.

While Ms O’Brien is mulling this offer, she has said she would be hesitant to stay in Australia.

“It’s boiled down to me losing $300 a month. The money you had to see the doctor if you got sick, because we don’t have Medicare, you don’t have that any more,” she said.

She estimates that she will suffer a $17,000 loss to her earnings each year.

With rent of $700 a week on a two-bed unit in Wollstonecraft, on Sydney’s North Shore, the couple are now looking to take in a new tenant in their spare room to help with costs.

Tony Mongey, from Tipperary, works as a senior project manager with construction industry consultancy Davis Langdon in Cairns.

The 35-year-old, who has been in Australia for the four years, is stoic about the end to the perk.

“What my employer has done – rather than cover it because they can’t – is actually agree to pay for my permanent residency,” he said.

“As soon as you live here it’s a benefit of yours, so all of a sudden, quite quickly, it almost seems like a bit of a government grab [to cut it],” he said.

“It’s a bit rubbish when you’re receiving $1,000 less a month,” he said.

“You haven’t really lost it, you were just fortunate to receive it in the first instance.”

NSW Deputy Premier Andrew Stoner.

The New South Wales government recently announced its ambitious new plan to lure skilled migrants to the state.

Deputy Premier Andrew Stoner announced the O’Farrell government’s intent to seek an increase in the share of state-government skilled migrants it receives annually from the commonwealth.

Whether or not this transpires is entirely at the mercy of the federal government and the Minister for Immigration Chris Bowen.

If the additional allocation is acquired, many of the sponsored visas will be earmarked for healthcare workers, engineers and tradespeople in regional areas.

Commenting on the new strategy to the Irish Echo recently, Mr Stoner said he encouraged Irish workers who possess skills in ICT, pharmaceuticals, biotechnology and sustainable environments technologies, to consider migrating to Sydney or regional NSW.

The Deputy Premier made a pitch to Irish entrepreneurs, inviting them to investigate setting up as business migrants in the state. He cited the “experience, international connections, entrepreneurial skills and capital” that such people could bring to NSW.

It is clear that state government’s message is not being pitched at the backpacker contingent, rather, at workers who have built experience in their niche.

These are highly skilled sectors and individuals that Mr Stoner refers to.

It follows that the age profile – and indeed family situation of these potential candidates for migration – is of a different nature to that of recent graduates or those seeking simply to come to Australia ‘to do the year’.

These are candidates that may be married or have children.

The Irish contingent is likely to be drawn from the new wave – those Irish economic migrants who might never have considered leaving the Emerald Isle before 2008, but have been forced to do so by a downward spiralling economy.

The arrival of these migrant mums and dads has played a part in the burgeoning Irish family networks now found in many state capitals.

Yet, the O’Farrell government faces a tough sell to similar people, who are weighing up a potential move.

Cost of living and job prospects are significantly more advantageous in Queensland and Western Australia than in Sydney or Melbourne.

Crucially, no other state, save for the Australian Capital Territory, imposes as punitive a public schooling fee structure on temporary resident parents as does NSW.

Many migrants are unaware of the high costs – up to $5,500 a year – of putting their children through public schools in New South Wales until it comes to time to enrol. The fees can be partially refunded if families decide to up sticks to another state.

As recently as last week, the state government reaffirmed its commitment to the lucrative fee model. The Echo reported last month that it brings in $12m a year.

If the fees remain, then it behooves the government to prominently display them among the migration material it distributes at expos in Europe and puts its name to online.

At present, budding migrants have more chance of finding Alice down a rabbit hole than they do of finding a cogent outlay of the costs.

The information is buried in the bowels of NSW Education international students website (www.detinternational.nsw.edu.au/schools), not the first place migrant parents would look, when weighing up a life-changing move.

Armed with the facts, what migrant parents wouldn’t choose sunny Queensland or laid-back Perth to school their children, especially with an extra $5,500 in their pockets each year?

In this sense, NSW’s new migration strategy is flawed from the outset.

While these fees remain, the state will struggle to prise an entire tranche of potential migrants from the lure of other Australian states.

What are you views on school fees? Share your thoughts by emailing newsdesk@irishecho.com.au

Almost all temporary residents in Australia will lose access to the Living Away From Home Allowance (LAFHA) under plans unveiled by the Australian government today.

The Treasurer Wayne Swan announced the changes as part of a package of measures aimed at boosting government revenue.

The new rules will come into force from July 1, 2012.

LAFHA is widely used by temporary residents to boost their take-home pay. Some employers pay their foreign workers a LAFHA which comes off their gross wage. They then pay income tax on the lesser amount.

Under reforms announced today: access to the tax exemption for temporary residents will be “limited to those who maintain a residence for their own use in Australia, which they are living away from for work purposes, such as ‘fly-in fly-out’ workers”.

This will effectively close off the option for most temporary residents who claim the allowance because they are living away from their original home ie Ireland. That will no longer be allowable, according to the release from Treasury.

“The Government will introduce reforms to stop individuals from being able to exploit the tax exemption for living-away-from-home allowance and benefits,” the Treasurer said.

“This tax exemption is being increasingly misused by a narrow group of people, particularly highly-paid executives and foreign workers, at the expense of Australian taxpayers.

“Rorting of this tax exemption was one of the issues raised at the Tax Forum, and has seen the total amount of tax-free living-away-from-home allowance reported by employers to the Australian Taxation Office increase from $162 million in 2004-05 to $740 million in 2010-11.

“No permanent resident legitimately using this tax exemption for accommodation and food expenses will lose any entitlements. These reforms will not affect other tax concessions, such as those that apply to travel and meal allowances, and remote area fringe benefits. The reforms will apply from 1 July 2012.

“This start date will enable the Government to undertake an extensive consultation process on these reforms, so appropriate transitional arrangements can be put in place, including in regional Australia.

“These changes will ensure that a level playing field exists between temporary residents and permanent residents, and that Australian taxpayers are not funding the unfair exploitation of concessions.”

:: Reaction

One Irish mother, who moved to Australia with her husband and two young children on a sponsored 457 visa last May, told the Irish Echo that the removal of the allowance would be a disaster for the family budget.

“As temporary residents we do not have access to Medicare. We also have to pay thousands of dollars for our kids to attend government schools. The LAFHA has given us a chance to live and work in Sydney but without it, we may have to consider going back to Ireland.”

A Melbourne-based Irish mother said without the allowance her family may be forced to leave Australia.

“We’ll have to go home next year as after our rent, bills in Ireland (car loans, bank loan, mortgage), crèche and travel costs we are only left with the extra I get from LAFHA. Permanent residency would be perfect for us but we just can’t afford to pay for it yet,” she said.

“I’m just hoping my company can do something to help as over 50 per cent if not more of their employees are on 457 visas.”

Meanwhile, recruitment agencies that have offered the allowance as part of their salary packaging are hoping to win some change through a consultation process.

One recruitment source said the move made clear that the government was directly targeting temporary residents.

KPMG tax partner Andy Hutt told the Irish Echo that workers seeking to recoup the loss via negotiations for a salary increase may find that their contracts have prepared for the dissolution of LAFHA.

“Many [companies] have got it written in that they’re not obliged to provide those benefits if the tax rules change, so it will be a relevantly straightforward change for them,” he said.

Mr Hutt said temporary workers who have used the allowance to pay regular large outgoings, such as rent, may now struggle.

“There will be some people who went into leases for accommodation here in Australia in expectation of being able to get that paid for out of pre-tax remuneration and they may find that hard to sustain once the tax exemption falls away. But I think the government will argue ‘you’ve got seven months to think about that and manage your finance’ so you can deal with that come July’,” he said.

“Fundamentally, the temporary residents who are affected don’t vote.”

Additional reporting by Luke O’Neill