I've applied for 457 and was granted it successfully for 4 years. My defacto partner also received hers (whew!)

I'm dual citizen naturalised british.
She is EU national.

According to visa rules, if she acquires UK nationality prior to clearing immigration, we need to inform DIBP via form 1022. Otherwise they are allowed to cancel our visa. And UK citizenship includes a pledge to "make UK our home".

Would it be difficult for her to acquire UK Citizenship and still come join me under 457 for the 4 years?

Why apply if she's already an EU National and planning to live in Australia?

Cos a 457 is only a temporary visa, and unless they are applying for PR separately they will have to leave at the end of the contract.

It's an emotional reason I'm afraid. We believe a UK passport offers more rights and benefits than her original EU one, and it is harder to acquire British nationality. If she decides to leave Australia and return to Britain, if she still wishes to become British, it will take another 5 years.

I plan to enter Australia in 1 month; and she would join me after a few months after she acquires British citizenship.

I'm thinking, as the lead visa applicant, I will clear immigration in 1 month; does it mean that (from http://www.immi.gov.au/allforms/pdf/1022.pdf ) :

I do not have to notify DIBP of her additional nationality?

That's not relevant. As an EU National they would still have the right to reside in the UK after returning from Australia. The OP has explained their reasons and they are fair enough (and nothing to do with having a 457). I hope it works out for them.

You said they are planning to 'live' in Aus. They can't live here permanently on a 457. Thats why its relevant, they are obviously thinking ahead, and in the future British nationality may be important to them.

I did said 'live', I didn't say or imply 'live permanently'. Their reasons for getting UK citizenship have nothing whatsoever to do with a 457 visa.

As she will not have cleared immigration, you will need to update DIBP of any changes until she herself is immigration cleared

Shucks. We will be very upset if dibp decide to throw a tantrum because of this. The only way otherwise I can see is for her to clear immigration, return to uk, apply citizenship, and return oz.

I don't think they will worry about it. Does she intend to apply for UK passport?

Hmm eventually yes, however, this can be done from within oz by applying to British consulate.

457 does ask for evidence of citizenship, passport is the most common one given, but certificate of naturalisation is the canonical one. And obviously she gets a new nationality is effectively a change in circumstances. My sister also tells me not to worry because 457 is temporary anyway. We would want to remain truthful however, for eventual PR application.

My question is - Why would Australia care if she applies for British nationality/passport and then still comes to Aus under her original passport/nationality?

I don't know much about Australian immigration but I can't see gaining another nationality being an issue, or DIBP being very upset about it, as long as you inform them of the acquisition of British citizenship. And I definitely see OPs point of view re getting citizenship. If you are eligible for any other nationality without affecting your original one, you should get it...

I think maybe the easiest answer would be to ask the case officer directly. They would have to know anyway if she becomes British!

Really - I think everyone is over-complicating this issue somewhat. It makes absolutely no difference to eligibility for an Australian 457 visa, so while technically ,DIBP may need to be informed, it is not a material change of circumstances.

Secondly, it's normally a good idea to become a British citizen, if eligible, and there is no strong reason not to. No guarantee the EU/EEA immigration rules will be the same in x number of years.

Thirdly the concern over the move to Australia might affect a Home Office naturalisation caseworker more than a DIBP officer. Spouses of British citizens do not need to promise to settle in the U.K. after naturalisation. Has this application already been made, or is it planned? Is there any option to get married?

Finally - you don't tell us what EU nation she is from, but in a few cases, she will automatically cease to be a citizen of that country. In that case, her passport would become invalid and she would have to replace it with a British passport.

This entire post. +1 ! Couldnt've said it better myself!