As discussed in our previous post regarding prospective investment visa reforms, which can be found here, the Australian Federal Government’s “Getting a Better Deal for Australia” report aimed to investigate ways in which our nation could derive increased benefit from our longstanding Business Innovation and Investment Program (“BIIP”). The results are in, and as with most migration reforms, the consequences are mixed.
New Changes to Australian Business Visas
In general terms, the Australian business skills migration scheme will change in a number of key aspects, taking effect from 1 July 2021:
- The program will be reduced from nine (9) to four (4) streams, with the elimination of the two (2) streams of the Subclass 132 visa and several streams of the Subclass 188/888 visas.
- Validity of the provisional visa will be 5 years, permitting transition to permanent residency after 3 years.
- Increases to thresholds for some business turnover and asset tests.
- Scrapping of the funding threshold of the entrepreneur stream.
In addition to the above changes, further industry consultation is ongoing regarding modification of the complying investment framework. It has further been indicated that additional changes may be announced throughout the first half of 2021.
Since the introduction of the current BIIP, the scheme has consisted of many divergent streams, each with their own requirements, conditions, and procedures. Two of the current streams fall under the Subclass 132 visa, with the remaining 7 streams relating to the two stage Subclass 188 and 888 pathways. The high number of pathways within the scheme was thought to have led to confusion, unnecessarily complicating BIIP and leading to the underutilization of less attractive streams.
In order to simplify and streamline business migration, from 1 July 2021, the following streams will be closed to new applicants:
- Premium Investor (Subclass 188/888)
- Business Innovation Extension (Subclass 188/888)
- Significant Investor Extension (Subclass 188/888)
- Significant Business History (Subclass 132)
- Venture Capital Entrepreneur (Subclass 132)
The remaining 4 streams, which all fall under the Subclass 188/888 pathway, will be as follows:
As indicated from the above, the long underutilised Subclass 132 will no longer be open to new applicants, and the redundant Premium Investor stream will likewise become unavailable.
In relation to the two extension streams, as of 1 July 2021, extension of Business Innovation and Significant Investor stream visas will be facilitated through more general provisions, subject to additional requirements. On the basis of this change, the extension streams have become redundant and will therefore be effectively abolished.
Provisional Visa Duration and Extension
As at the time of writing, visa durations for Subclass 188 visa holders vary from stream to stream. This factor has served to lend arbitrary variance to the BIIP framework and compound the complexity associated with securing a Subclass 888 visa. As part of the 1 July 2021 changes, all streams of Subclass 188 will conform to the following:
- Subclass 188 visas will be valid for a period of 5 years, from the date of grant.
- Subclass 188 visa holders can transition to permanent residency through Subclass 888 after 3 years, subject to transitional requirements.
By making visa durations and timelines for transition consistent across streams, these reforms add some much-needed certainty for prospective applicants. The additional time provided to meet the Subclass 888 requirements is likewise a welcome addition, particularly for streams with no avenue for Subclass 188 extension.
Business Turnover, Asset and Funding Thresholds
Amongst the core considerations of the “Getting a Better Deal for Australia” report was whether Australia could afford to increase the requirements of the BIIP. Whilst a significant portion of stakeholders indicated reservations regarding restricting eligibility, the general consensus indicated that some increase was likely feasible without unduly curtailing demand for the program.
As a result of these findings, the final report has settled on the following changes to the Business Innovation stream:
- Applicants will be required to hold AUD$1.25 million in business and personal assets (up from AUD$800,000).
- Applicants will be required to own and operate a business with AUD$750,000 in annual turnover (up from AUD$500,000).
From the above we can see that upon implementation of the BIIP reforms, requirements under the Business Innovation stream of Subclass 188 will become increasingly stringent. Given that many prospective applicants may find themselves ineligible under these new rules, those looking to avoid these stricter requirements will need to act fast.
Further, under the Entrepreneur stream of Subclass 188, the AUD$200,000 funding threshold will be scrapped. This is, however, likely to be offset by the endorsement requirements of various State and Territory bodies. Given the limited interest in this stream historically, it remains to be seen how this change will stimulate demand.
Whilst the above covers the major amendments which, as at the time of writing, are known to be being introduced in July 2021, the report makes clear that the consultation process remains ongoing. Whilst it is alleged that any additional amendments will be publicized in time for prospective applications to make adjustments, it is critical to watch this space for future updates.
One area of probable reform is the Complying Investment Framework and, presumably, the regulations which mandate the makeup of these investments. It can be suggested, based on the report’s comments on submissions made by stakeholders, that we may see an increase in the flexibility of investment options permitted under the framework. This is, of course, purely speculative, but is nevertheless a possibility within the foreseeable future.
Whilst less has been said of other matters, further reform may be seen in other aspects of the scheme. These have included awarding points under the applicable investor stream points test for applicants investing beyond the proscribed investment threshold or offering points and priority processing in exchange for committing to regional investment.
In aggregate, the proposed changes will serve to greatly simplify the BIIP process for applicants and their legal advisors alike, trimming the fat and reducing uncertainty. Greater consistency across streams serve to, once again, remove redundancies and make the program more comprehensible to prospective applicants. Finally, despite some slight adjustments to eligibility, the current proposed reforms serve to benefit eligible applicants, offering a clearer pathway to permanent residency and more time to meet their obligations under the BIIP scheme.
Please speak to our solicitors if you have any migration inquiries.