UPDATE 10 May 2018: It looks like the Government will reverse the changes which increased the income threshold in respect of assurance of support. This means old rules would be applied again, which is a lot more beneficial to migrants. We will provide more details as they become available.
The Government has recently introduced major changes in relation to parent visa applications, through a little known piece of legislation. The changes effect all existing applications. In short, the Government has dramatically increased the income threshold in respect of Assurance of Support.
Assurance of Support
Before a parent visa application is finalised an individual must provide the Government an Assurance of Support (AoS). This basically guarantees that if the parents receive social security payments, then the Government can recover those payments from the assurer. The person giving the AoS must prove to the Government that their income is above a minimum threshold. So far, this is not new.
Income threshold increased
What’s changed is that, effective 1 April 2018, the assurer now must prove a much higher minimum income than before. The income threshold has basically doubled. For example, if one individual, who has a partner, wants to give an AoS for his/her parents, the minimum income amount they must prove is approximately $115,000! (calculated as at 1 April 2018)
And here is some more bad news: you need to show that your income was above the threshold not just in this year, but in the 2 previous financial years as well. This is extremely harsh on people who lodged their applications, say, a year ago. Back then, their family members might have been able to prove that their earnings were above the amount which was applicable a year ago. But now they must retrospectively prove that their previous earnings were above the new minimum.
This is what you need to do to work out the amount which applies in your case: First, find out what is the annual income amount over which no Newstart allowance is payable. Currently, this is around $28,750. You then multiply this by the total number of the following: yourself, your partner, and the number of visa applicants. (So in the above example, $28,750 x 4 = $115,000).
Multiple people giving AoS
Up to 3 people can jointly give an AoS. However, in this case, when you multiple your base amount (i.e. $28,750) you need to include all the people who give AoS, and their partners as well. So, if you and your partner jointly provide an AoS for your parents, then the minimum income you have to get to between yourselves is $115,000 (again, $28,750 x 4).
But if you provide an AoS jointly with someone other than your partner, than you still have to take into account your partner when you multiple your base amount. So in this case, the figure will be $143,750 (i.e. $28,750 x 5, which includes you, your partner, the other person giving the AoS, and your parents).
Company giving AoS
It is possible for a company to give an AoS. The most important thing is this: the income test does not apply to companies. The legislation simply states that the company must have been operating for 2 years minimum, and must have capacity to support the the visa applicants. The company must also give a bank guarantee (further on this below).
So it looks like there may be some flexibility around companies, because as long as the 2 year legitimate trading requirement is satisfied, and the guarantee is deposited, the company qualifies to be an AoS provider. The Government will likely examine the company’s records to see if it can support the visa applicants. But as companies don’t have to meet the income test, it’s unclear how the Government could decide that certain companies aren’t able to provide the necessary level of support. (Most companies are operated in a way so as to minimise income tax obligations, which means a company with little profit may still well be capable to support visa applicants.)
Individuals AoS providers must also deposit a bank guarantee. For contributory parent visa applicants, this is $10,000 for the primary applicant and $4,000 for the secondary applicant. This will increase to $15K plus $6K from 1 April 2019.
Companies must deposit $20K, increasing to $30K next year.
The bank guarantee is deposited with the Commonwealth Bank, into a term deposit. Interest may be paid periodically. Interest can be then paid into a different account – i.e. it won’t have to be kept as part of the guarantee.
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