Looking to sponsor overseas workers for your Australian business? You’ll need to know about the SAF levy. This mandatory training contribution charge came into effect on August 12, 2018, and applies to all employers who sponsor foreign workers.
The Skilling Australians Fund (SAF) levy helps develop Australian workforce skills through training initiatives of all types. The levy amount varies between AUD 1,200 and AUD 7,200, based on your business turnover and visa duration. Many employers struggle to understand the exact requirements and calculations.
Let me walk you through everything about the SAF levy. You’ll learn how calculations work, when you need to pay, and smart ways to handle this business expense.
Planning Your SAF Levy Budget
You need to think about several factors when calculating your SAF levy budget. The Department of Home Affairs bases the levy amount on your business turnover and how long the visa lasts.
Businesses with annual turnover under AUD 15.29 million pay AUD 1834.79 yearly for each nominated worker on a temporary skilled visa (TSS 482). The cost goes up to AUD 2752.18 per worker annually for larger businesses that exceed AUD 15.29 million turnover.
The Employer Nomination Scheme (ENS 186) permanent visas work differently. Small businesses pay a one-off fee of AUD 4586.97 per nominee, while larger businesses need to pay AUD 7644.95. The good news is that these levy payments are tax-deductible.
Let’s look at a real example: A small business’s budget for sponsoring an employee over four years would be AUD 7339.15 (AUD 1834.79 × 4 years). The department wants the full payment when you lodge the nomination application.
Your SAF levy expenses can be managed by:
- Checking your previous financial year’s annual turnover
- Working out the total sponsorship time needed
- Planning for the upfront payment
- Including the tax-deductible benefit in your calculations
Refunds are rare and happen only in specific cases. We see this happening when:
- The visa holder never starts work despite approved applications
- Health or character grounds lead to visa application rejection
- Wrong turnover information forces nomination application withdrawal
- TSS visa holders leave within 12 months (for visas longer than 12 months)
The levy is part of a bigger picture in the government’s plans. The National Skills Agreement kicked off in January 2024, with up to AUD 19.27 billion planned over 5 years for vocational education and training. The SAF levy keeps supporting the government’s investment in developing skills.
Managing SAF Levy Compliance
Your business must comply with SAF levy regulations to keep its sponsorship privileges. The Department of Home Affairs enforces these requirements strictly and imposes penalties for non-compliance.
Your business needs to pay the SAF levy directly when lodging a nomination application. You cannot pass this cost to the visa applicant under any circumstances. Such actions can lead to sponsorship bars and financial penalties.
To comply accurately:
- Maintain detailed records of all SAF levy payments
- Pay before nomination deadlines
- Keep track of sponsored workers’ employment periods
- Stay updated on visa status changes
Unpaid amounts attract daily compounding penalties at 2% monthly. The Department uses a graduated enforcement approach that ranges from education and support to civil or criminal action in severe cases.
You must promptly notify the Department of Home Affairs if your sponsored employee leaves before their visa period ends. This notification rule applies to visa types of all sizes, though refund eligibility differs by category.
The SAF levy helps businesses prioritise Australian workers while funding national training initiatives. This system has allowed the government to allocate AUD 2.29 billion for Fee-Free TAFE and vocational education places between 2023 and 2026.
The Department assesses refund applications case by case. You may qualify for a refund in these situations:
- The worker never begins employment after visa approval
- Visa applications get rejected on health/character grounds
- Nomination applications need withdrawal due to incorrect turnover information
- TSS visa holders leave within 12 months
Note that refunds only apply to unused full years of the SAF levy. You must actively apply for refunds with supporting evidence – they don’t happen automatically.
The Department of Employment and Workplace Relations (DEWR) manages these funds. This ensures contributions support Australian workforce development while helping businesses meet their skilled labour needs.
Smart SAF Levy Strategies
Your business’s bottom line will feel the effects of SAF levy decisions. This levy helps develop Australia’s workforce skills and creates training opportunities for local workers.
A simple payment structure exists when businesses change employers or occupations. Companies need to pay just one year of SAF levy when they take over an employee with a 457/482 visa, whatever the remaining visa duration.
Your SAF levy investment works best when you:
- Choose maximum sponsorship duration upfront instead of extending later
- Review the cost-benefit ratio of different visa options
- Watch refund eligibility closely
- Keep complete documentation of all payments
The levy supports apprenticeships and training initiatives throughout Australia. These funds have helped deliver over AUD 2.29 billion for 500,000 Fee-Free TAFE and vocational education places from 2023 to 2026.
Sponsoring businesses can claim SAF levy payments as tax deductions. In spite of that, you cannot pass these costs to visa holders through salary deductions or other means—it’s against the law.
The government makes sure training benefits get distributed fairly. SAF levies from specific industries should support training within those same sectors. This approach reduces long-term dependence on temporary visa workers.
The National Skills Agreement, which started in January 2024, sets aside up to AUD 19.27 billion over five years. Your SAF levy contributions play a significant role in this skills development initiative.
Businesses with poor compliance histories face extra scrutiny during nomination processes. You need excellent compliance records to get smooth visa processing.
The SAF levy collection now happens at the visa grant stage instead of the nomination stage. This timing will give a better chance of actual employment outcomes. Both employers and sponsored workers benefit when payments line up with real employment arrangements.
Conclusion
Your business’s sponsorship experience greatly depends on how well you manage SAF levy obligations. The original costs can range from AUD 1,200 to AUD 7,200. These payments are vital because they support Australia’s workforce development through training initiatives.
You can handle these expenses quickly with smart planning. Your informed decisions will come from thinking over sponsorship duration, proper documentation, and understanding refund conditions. The payments are tax-deductible, which helps ease your business’s financial burden.
Note that following the rules is significant; serious problems can arise if you try to pass costs to visa holders or make late payments. Your SAF levy payments are the foundations of the National Skills Agreement that creates opportunities for Australian workers through apprenticeships and vocational training programmes.
Your business needs current regulatory knowledge and accurate records to manage SAF levy requirements well. This comprehensive approach will give a smooth path to sponsor skilled workers while supporting Australia’s workforce development goals.