Pacific Australia Labour Mobility scheme

How the scheme works

Under the Pacific Australia Labour Mobility (PALM) scheme, workers from Pacific Island countries and Timor-Leste can work in Australia for either:

• short-term placements of up to 9 months
• long-term placements of between one and 4 years.

The PALM scheme is managed by the Department of Employment and Workplace Relations and the Department of Foreign Affairs and Trade (DFAT). For more information visit the PALM scheme websiteOpens in a new window.

How you're taxed in Australia depends on your residency for tax purposes.

Vietnam Labour Mobility Arrangement

The Vietnam Labour Mobility Arrangement (VLMA) helps recruit Vietnamese nationals for short and long-term agricultural work in Australia. The work can be unskilled, low-skilled, or semi-skilled, and can last up to 4 years. For more information on this arrangement visit Vietnam Labour Mobility ArrangementExternal Link.

The VLMA is part of the PALM scheme. Workers under the VLMA will be taxed on the same basis as PALM scheme workers.

Your residency for tax purposes

For tax purposes in Australia, individuals will be either:

• an Australian resident
• a foreign resident.

Whether you're a resident for tax purposes will depend on your individual circumstances. We accept PALM scheme workers as:

• foreign residents for tax purposes if they are short-term PALM scheme workers for up to 9 months
• Australian residents for tax purposes if they are long-term PALM scheme workers for one to 4 years.

Tax and withholding in Australia

If you have a Temporary Work (International Relations) (subclass 403) visa under the PALM scheme, your employer will withhold tax from your pay.

The amount they withhold depends on your residency for tax purposes and how much you earn.

You, or your employer, can check your visa status using the Visa Entitlement Verification Online systemExternal Link.

Foreign resident workers

Your employer will withhold tax at a flat rate of 15% on all payments made to you if all the following apply:

• you are a foreign resident for tax purposes
• you work under the PALM scheme
• your employer is a PALM scheme approved employer.

This tax is paid to us by your employer and you are not required to lodge a tax return if you either:

• don’t earn income from any other sources in Australia
• only earn other income in Australia that has already had a final withholding tax applied such as bank interest.

Income you earn under the PALM scheme is non-assessable, non-exempt income and you can't claim any deductions against this income. You are exempt from the Medicare Levy as a foreign resident.

If your employer is not approved to hire under the PALM scheme, they will withhold tax at foreign resident rates and you will need to lodge a tax return.

Australian resident workers

If you're an Australian resident for tax purposes, you will pay tax at the rate set out in the individual income tax rates. Your employer is required to withhold tax when they pay you. You are required to lodge a tax return.

PALM scheme workers who come to Australia are, in most circumstances, are also temporary residents. Temporary residents are not entitled to Medicare benefits and therefore are entitled to be exempt from the Medicare levy. To claim a full exemption from the Medicare levy, you must have a Medicare Entitlement StatementExternal Link showing you are not entitled to Medicare benefits. If you don't obtain this statement, then you may have to pay the Medicare Levy.

You can claim certain expenses as deductions against your PALM income. However, there are some expenses you can’t claim as deductions as they are private expenses, such as:

• rent paid for accommodation that you live in
• flights to and from your home country.

For more information on what you can claim, see our occupation and industry specific guides. For example, we offered tailored guides for workers in the agriculture and meat industries.

Changing residency during the year

If your situation changes during the year, then your taxation obligations may also change.

If you arrive in Australia as a foreign resident on a short-term placement but later accept a long-term contract within the same income year, your residency status may change. You might become an Australian resident for part of the year, requiring you to lodge a tax return. If you change residency, then you will need to complete a withholding declaration to advise your employer you have become an Australian resident.

On 1 July 2024, Koa comes to Australia on a 403 visa for 9 months on a short-term placement to work in a meat processing factory. Koa only intend to be in Australia for the length of their contract before returning to their home country.

On 1 November 2024, Koa changes their mind and enters a contract for a long-term placement so that they can now stay for up to 4 years. Koa continues to only earn income from the PALM scheme during the long-term placement.

Koa earned the following PALM income during the 2024–25 income year:

For the period from 1 July 2024 to 31 October 2024, Koa is a foreign resident as their intention was to be in Australia for a short time on a short-term PALM placement and then return to their home country. During this time the PALM scheme approved employer was withholding 15% tax from Koa's salary and wages.

When Koa changes to being on a long-term placement, their residency status changes to being an Australian resident. This is because Koa’s intention has changed. They are now staying in Australia for a long-term period and reside here in a permanent way. When Koa’s residency status changes they submit a new withholding variation to authorise the employer to adjust the amount of tax withheld from their payments. Their employer will then start to withhold amounts from Koa’s tax at resident rates.

Since Koa was an Australian resident for part of the income year and earned over the tax-free threshold, they will need to lodge a tax return at the end of the income year. Koa will only include the $33,000 PALM income for the period 1 November 2024 to 30 June 2025 in their tax return. They can claim deductions incurred to earn this income for the same period.

The $16,700 PALM income from the period Koa was a foreign resident remains non-exempt, non-assessable. Koa does not include this amount in their tax return. Koa cannot claim any deductions incurred in earning this income for the period 1 July 2024 to 31 October 2024.

End of example

The family accompaniment pilot is an initiative to allow long-term PALM workers to bring their families to Australia. This pilot aims to reduce the negative social impacts of long periods of family separation and strengthen ties with the Pacific and Timor-Leste.

Generally, members of long-term PALM workers' families who are part of the pilot would be Australian residents while they are in Australia. If they work or earn other income they will pay tax at the rate set out in the individual income tax rates. They may have to lodge a tax return depending on their circumstances.

Participants in this pilot are entitled to enrol for Medicare. If they do so, they may need to pay the Medicare Levy. If they do not enrol, they will be exempt from the Medicare Levy if they are temporary residents and obtain a Medicare Entitlements Statement stating they are not entitled to Medicare benefits.

Before you start work in Australia, you should:

If you plan to work in Australia, you need a tax file number (TFN). Your TFN is your personal reference number in our tax system.

You can apply for a TFN online once you have your work visa.

You don't have to have a TFN, but without one you may pay more tax.

When you start work, you give your employer a Tax file number declaration. This helps the employer work out how much tax to withhold from your pay.

Your employer has to also pay super for you if you are an eligible employee. They may also be required to pay fringe benefits tax if they provide you with any benefits in addition to your pay.

Everyone working in Australia has the same workplace rights under the National Employment StandardsExternal Link (NES).

The national minimum wage and NES make up the minimum employment entitlements that must be provided to all employees.

The Fair Work Ombudsman provides information on workplace rights and entitlements for visa holders and migrant workersExternal Link.

At the end of the income year or when you finish working in Australia, consider if you need to:

Your employer will usually provide you with an income statement. It will show the amount you earned, tax withheld and super that has been paid. You can access and see your year-to-date tax and super information (income statement) in ATO online services through your myGov account from within Australia. If you can't access your information, you can contact us.

The Australian income year starts on 1 July and ends on 30 June the following year.

You don't need to lodge a tax return or a non-lodgment advice if:

You will need to lodge a tax return if you are either:

If you leave Australia permanently before 30 June, you can lodge your tax return early.

When you leave Australia and return to your home country, you can apply to have your super paid to you as a departing Australia superannuation payment (DASP).

You can claim when you leave Australia if you meet all DASP requirements.

If you are a foreign resident PALM scheme worker with no other income and your employer took out more than 15% of your income for taxes, you might be eligible to receive back the extra money.

You will need to send us a letter asking for a refund and provide documents to prove your claim.

Your letter must include the following information:

You should also include the following, if available:

You need to send your request, including all supporting documents, by post to:

Australian Taxation Office
PO Box 1032
ALBURY  NSW  2640