Desperate farm businesses have been left with the galling choice between paying nearly $10,000 in fringe benefits tax to keep a foreign worker in Australia or, if they cannot afford the impost, becoming trapped in a vicious circle of continuously letting trained staff go just to seek their replacements.
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RSM business advisory director Will Laird said the government could have helped regional employers by using the federal budget to exempt them from "significant" FBT costs for temporary visa extensions or to transition talent - that they had already invested in to originally relocate - to a permanent residency visa.
Labour is often the highest cost of small to medium business and this has only amplified during a period of high inflation and interest rates and a major worker shortage, as new research shows a third of small businesses are in financial hardship and struggling to pay the bills.
Mr Laird said the situation was a particularly common one faced by thousands of sponsoring employers of 482 temporary visa holders seeking to extend the temporary visa or transition them to a 186 permanent visa that can include an application fee of $4,640 and professional fees of $5,000 for an individual, or around $9,640 in total.
He said if the employer pays for those costs to support the employee, the employer would then attract a fringe benefits tax bill on top of about $9,492, or a doubling of the total cost to the employer.
In a real-life scenario, he said a farm business client with 10 temporary visa employees, who had been trained and integrated into the business and the local farming community, wanted to nominate and support their transition to a permanent visa.
In this situation, the total FBT cost was a "staggering" $94,920.
These costs can then be higher with other fees and charges, and increase further if the individual has family members.
"Farming businesses are desperate to retain the staff they have previously relocated and trained," Mr Laird said.
"Regional and rural employers faced with a large tax impost of $10,000 per employee for retaining those staff on expiry of their temporary visa is a significant and misdirected tax on employers."
Overseas-sourced workers are a common labour supply option and are directly employed by small businesses such as farms, agricultural engineering firms, veterinary clinics and farm supplies firms.
The Toowoomba-based Mr Laird said the situation would be fixed for agriculture if the government extended the FBT exemption that currently applies to the costs of relocating an employee to a new place of employment to sponsoring employers to exempt the costs of retaining those staff through renewing visas and residency applications.
"This reflects the significant investment already made by regional employers in finding and training such workers and the current inappropriate taxing of such employers trying to assist those workers with the costs of remaining in the local community with which they have been integrating," he said.
Mr Laird added that the broader farming community also suffers when such workers - who have become part of the local community and are eligible to transition to a permanent visa - are forced to leave the community.
An inquiry was recently told that labour was the number one issue fuelling rising on-farm costs and worker shortages were an on-farm safety issue by forcing some to work around the clock.
Labour shortages across the farm sector have also forced many to operate below the capacity they were expected to achieve in recent years.
Their labour shortage challenge not helped by a recent post-pandemic population drift away from some agricultural districts, eroding the big gains achieved in regional areas between 2020 and 2022 when a wave of city dwellers went bush.
