Key Takeaways
- Around a third of Australia’s workforce was born overseas, and in some industries the figure is much higher.
- Businesses that sponsor or employ skilled migrants face specific tax, payroll and superannuation obligations most employers don’t fully understand.
- Visa sponsorship costs, migration agent fees and relocation support can have different tax treatments depending on how they’re structured.
- Getting PAYG withholding, superannuation guarantee and payroll tax right for migrant employees matters just as much as the visa paperwork.
- Good workforce planning and good tax planning go hand in hand — especially for startups and small businesses that depend on skilled migrants to grow.
The Workforce Story Behind the Migration Headlines
More than one in three people working in Australia today were born overseas. In our capital cities, that number climbs even higher. Migrant workers aren’t a small part of the picture — they’re central to how hospitals run, how aged care operates, how IT systems get maintained, and increasingly, how homes get built.
Most of the public conversation around migration focuses on population growth, housing and congestion. Fair enough — those are real issues. But for business owners, the more pressing question is usually simpler: who is going to do the work?
At AUZ Tax, we work with plenty of startups and growing businesses that rely on skilled migrant workers to fill roles they simply can’t fill locally — in healthcare, IT, trades, hospitality and beyond. What often gets overlooked is that hiring migrant workers isn’t just a visa and HR exercise. It comes with tax and compliance obligations that, if missed, can be costly.
Why This Matters More Than Ever
Australia’s population is ageing. As more Baby Boomers retire, there are fewer working-age Australians to fill the gap, even as demand for healthcare, aged care and other essential services keeps rising. At the same time, industries like construction remain short on tradespeople, despite housing shortages pushing up demand for new builds.
For many businesses, sponsoring or hiring skilled migrant workers isn’t optional — it’s the only realistic way to keep operating and growing. That makes understanding the tax and payroll side of the equation just as important as finding the right candidate.
What Employers Need to Get Right When Hiring Migrant Workers
This is where we want to go beyond the general workforce discussion and focus on what actually matters for your business at tax time.
1. Visa Sponsorship Costs: What’s Deductible and What Isn’t
If your business sponsors a skilled worker (for example, through an employer-sponsored visa pathway), there are several costs involved — nomination fees, sponsorship charges, migration agent fees and visa application costs.
Some of these costs are deductible business expenses, but the rules depend on exactly what the payment is for and who it legally belongs to. Certain visa charges, like the Skilling Australians Fund levy, have specific tax treatment that differs from standard recruitment costs. Getting this wrong is a common mistake we see — treating all visa-related costs the same way when the ATO doesn’t.
2. PAYG Withholding Still Applies
Migrant employees working in Australia under most visa types are treated the same as any other employee for PAYG withholding purposes. Their visa status doesn’t exempt your business from correctly withholding tax from their wages — a mistake that can leave you exposed if the ATO reviews your payroll.
3. Superannuation Guarantee Obligations Don’t Change
Whether an employee is Australian-born or a recent migrant, if they meet the standard eligibility criteria, they’re generally entitled to superannuation guarantee contributions just like anyone else. Some employers mistakenly assume temporary visa holders are treated differently — they’re not, in most cases. Getting this wrong can result in a superannuation guarantee charge down the track, which comes with penalties and interest on top of the unpaid amount.
4. Tax Residency Isn’t the Same as Visa Status
This is one of the more misunderstood areas. An employee’s tax residency status in Australia is based on tax residency tests, not their visa category. A skilled migrant worker might become an Australian tax resident relatively quickly, which changes how their income is taxed, what tax-free threshold applies, and what they need to declare. Employers and employees both benefit from getting this assessed properly, rather than assuming visa type dictates tax treatment.
5. Payroll Tax Applies Regardless of Where Your Staff Were Born
As your business grows and takes on more staff — including migrant workers filling skills gaps — payroll tax thresholds can creep up faster than expected. This is especially relevant for industries like healthcare, aged care, construction and IT, where migrant workers make up a large share of the workforce. Businesses expanding their team to solve a skills shortage should factor payroll tax into their growth planning, not treat it as an afterthought.
6. Relocation and Settlement Support Has Its Own Tax Treatment
Many employers help sponsored workers with relocation costs, temporary accommodation or other settlement support to make the move to Australia (or to a regional area) easier. These payments can trigger fringe benefits tax (FBT) considerations depending on how they’re structured. There are concessions available in some circumstances — particularly for relocation costs — but they need to be set up correctly from the start to apply.
Why Regional and Growing Businesses Should Pay Extra Attention
Regional businesses in particular often struggle to attract workers — not because the jobs don’t exist, but because many potential migrant workers simply aren’t aware of opportunities outside the major cities. For regional employers who do successfully sponsor or attract skilled migrant workers, getting the tax and payroll setup right from day one avoids costly corrections later, especially once that employee’s family and long-term plans are tied to the role.
Startups and small businesses face a similar challenge from a different angle: they’re often sponsoring their first overseas worker without in-house HR or payroll expertise, which is exactly when these tax and compliance details are most likely to be missed.
What This Means for Your Business
You can’t control Australia’s migration policy or the broader skills shortage. But if your business relies on migrant workers — or is likely to in the next few years — you can control:
- Whether visa and sponsorship costs are being claimed correctly
- Whether PAYG withholding and superannuation are being applied properly for every employee, regardless of visa status
- Whether your growing payroll is tracking toward payroll tax thresholds you should be planning for
- Whether relocation or settlement support is structured to avoid unnecessary FBT exposure
These aren’t complicated fixes once you know to look for them — but they’re easy to miss if nobody’s looking.
How AUZ Tax Can Help
At AUZ Tax, we work with startups and growing businesses across Australia that depend on migrant talent to fill critical skills gaps. From setting up payroll correctly for sponsored employees to planning ahead for payroll tax and FBT, our team can help make sure your business’s tax position keeps pace with your workforce — not the other way around.
Frequently Asked Questions
Do migrant employees pay the same tax as Australian-born employees? Generally, yes — tax treatment is based on tax residency status, not where someone was born or their visa category. Most skilled migrant workers become Australian tax residents fairly quickly, which affects how their income is taxed.
Can my business claim visa sponsorship costs as a tax deduction? Many sponsorship and recruitment-related costs are deductible, but some visa charges have specific tax treatment. It’s worth having these reviewed rather than assuming all costs are treated the same way.
Do I need to pay superannuation for temporary visa holders? In most cases, yes. Superannuation guarantee obligations generally apply to eligible employees regardless of visa status, and getting this wrong can lead to a superannuation guarantee charge.
Does hiring migrant workers affect my payroll tax threshold? Yes — payroll tax is based on total wages paid, regardless of where your employees were born. Businesses growing their team to fill skills shortages should factor this into their planning.
Are relocation costs for sponsored employees tax deductible? They can be, but the tax treatment depends on how the payments are structured, and fringe benefits tax may apply. Proper structuring from the outset can help access available concessions.