Backpacker tax in Australia still on the cards

by Ray Clancy on May 5, 2016

in Australia Travel, Jobs in Australia

A new tax that would require backpackers from overseas to pay tax of up to 32.5 cents for every dollar earned is still likely to be introduced in Australia.

Plans for the tax, which has been widely condemned, were announced last year but it was thought that an outcry against would see its introduction abolished.

However, the tax was named in the new national Budget as due to come into effect in July this year although officials moved quickly to say it could be delayed for six months for further consultation to take place.

farmer

People on Australia on a working holiday maker visa can work during their time in the country and currently pay tax only on money they earn beyond the $18,200 tax threshold. The Working Holiday Maker programme, which includes the Working Holiday (subclass 417) visa and Work and Holiday (subclass 462) visa, holders can stay in Australia for 12 months and work for up to six months with any one employer.

Working holiday makers are regarded as being important to industries like tourism, hospitality and farming who often need seasonal workers and there is already anecdotal evidence that backpackers are switching to New Zealand this summer rather than risk paying the tax in Australia.

The National Farmers’ Federation said it has received more than 31,000 signatures on a petition opposing the backpackers tax and AUSVEH deputy chief executive officer Andrew White said the proposal has already has an impact with vegetable growers worried about recruiting enough workers to harvest their crops.

“Australian growers rely on backpackers to offset domestic labour shortages and perform the high amounts of manual labour needed in vegetable production. This decision endangers the availability of this important labour source and could leave growers unable to get crops off the field,” he explained.

Tourism and Transport Forum chief executive Margy Osmond, whose group has lobbied against the tax, said she would welcome a delay for the tax to be discussed further and warned that backpackers are shunning Australia in favour of New Zealand where backpackers pay tax of 10.5%.

Statistics from the Department of Immigration and Border Protection (DIBP) show that the number of backpackers coming to Australia has dropped repeatedly over the past two years, with over 34,000 fewer visas granted in 2014/2015 than in 2012/2013.

White added that the decline in backpacker numbers needs to be addressed if the country’s vegetable industry is to remain viable. “There is simply not enough local labour to satisfy demand during peak harvesting periods, and backpackers play a vital role on Australian farms by providing a workforce during these critical times,” he explained.

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