Temporary Skilled Migration Income Threshold (TSMIT) to increase from 1 July 2023

Temporary Skilled Migration Income Threshold (TSMIT) to increase from 1 July 2023

The Minister for Home Affairs, the Hon Claire O’Neill announced on the 27^th April that the Temporary Skilled Migration Income Threshold (TSMIT) will increase from $53,900 to $70,000 from July 1 2023.

The changes to this threshold will come into effect for applications received by the Department of Home Affairs after July 1 2023.  It does not apply to applications received before this date.

What is the TSMIT?

The Temporary Skilled Migration Income Threshold (TSMIT) is the minimum salary that must be paid to a sponsored employee to obtain a temporary skilled visa in Australia. The TSMIT is currently set at $53,900, but it will increase to $70,000 on July 1, 2023 for applications to sponsor employees in the following visa schemes.

• Temporary Skill Shortage (subclass 482)
• Employer Nomination Scheme (subclass 186)
• Skilled Employer Sponsored Regional (Provisional) (subclass 494)

Why has the Australian Government increased the TSMIT?

The Government’s rationale for increasing the TSMIT is to keep pace with the cost of living in Australia and to bring it in line with market rates.

When it was introduced in Sept 2009, the TSMIT was indexed annually to inflation. However, the TSMIT stopped being indexed in July 2013 and has remained at $53,900 since then. The Government’s view is that if the TSMIT had been indexed during that time, the threshold would be $73,600.

What the new TSMIT threshold means for applications lodged before 1 July 2023  

The Department of Home Affairs has confirmed that the new TSMIT does not apply to applications lodged before 1 July 2023.

What the new TSMIT threshold means for applications lodged from 1 July 2023  

From the 1 July, Visa applications for Temporary Skill Shortage (subclass 482), Employer Nomination Scheme (subclass 186) visa applicants and Skilled Employer Sponsored Regional (Provisional) (subclass 494) must nominate a salary of $70,000 per annum plus superannuation.

What is the impact on the Hospitality industry?

The increase in the TSMIT is likely to significantly impact the hospitality industry. As a major employer in Australia, it relies heavily on overseas workers to fill skilled positions. The increase in the TSMIT will make it more expensive for businesses to sponsor overseas workers, and it may make it more difficult for overseas workers to obtain a temporary skilled visa.

In our opinion, the increase in the TSMIT may put additional stress on restaurants and hospitality groups already struggling to find staff for fill positions in the front and back of house, especially in regional areas. Put simply, it will add additional challenges and make it more difficult to operate in an economic environment where interest rates are increasing, and monetary policy is trying to limit household spending.

Hopefully, we may see more industry-specific labour agreements to accommodate occupations such as Chefs, Cooks and Restaurants which could give concessions to bypass the TSMIT.

However, we note that Packaged Annualised salaries for any position above and including Level 4, if the applicant is working 45 Hours Monday to Saturday in the HIGA award, is already above the $70K mark. It is important to consider this when negotiating with applicants to arrive at a Guaranteed Annual salary that will meet the TSMIT.

If you have any further questions, please do not hesitate to get in touch. We can lodge applications at the current rates up to June 30, but remember that Labour Market Testing must be complete before lodgement, making the end of this month essential to placing your job ads.