Backpacker tax review in Australia well underway

by Ray Clancy on August 18, 2016

in Jobs in Australia

The Australian Government’s review and public consultation on issues affecting Working Holiday Maker visa holders is well under way with an announcement promised before the end of the year.

Public submissions must be made by Friday 02 September and the review’s outcomes will take effect from 01 January 2017 when it is proposed that the tax regime for working holiday makers will change.

Foreign Workers DuskThe review into a broad range of issues affecting the supply and taxation of labour performed by working holiday maker visa holders came after many employers, particularly those in the agriculture and hospitality sector voiced concerns that the so called backpacker tax would put young people off coming to Australia and working during their stay.

‘This review is essential to ensuring the government’s policy settings continue to meet growing demand for flexible labour, particularly in rural and regional Australia,’ said Barnaby Joyce, Deputy Prime Minister and Minister for Agriculture and Water Resources.

He confirmed that the review’s outcomes will be announced before January 2017 but critics point out that young people will be making plans not knowing how much tax they face paying if the go to Australia on a working holiday visa.

There has been widespread community interest in the supply and taxation of working holiday visa holders, in particular, the proposed tax rate of 32.5% for non-resident 417 and 462 visa holders.

The law currently considers transient working holiday makers as non-residents for taxation purposes, making them liable for 32.5 per cent tax from their first dollar earned. Under the 2015-16 Budget measure, most working holiday makers would no longer be able to access the tax-free threshold.

According to Joyce it is a complex issue that goes beyond the tax rate for individual visa holders. ‘The Australian Government recognises working holiday makers are a vital source of labour across the nation. It is equally important that working holiday makers pay a fair level of tax while in Australia,’ he said.

The review will consider relative international competitiveness, visa labour needs of the agricultural and tourism sectors, relevant unemployment policies, tax treatments for visa holders and protections for vulnerable workers.

Australia’s working holiday maker programme has become very popular. In 2001/2002 some 85,207 visas were granted, growing to 115,484 in 2005/2006, then 222,992 in 2011/2012 and 226,812 in 2014/2015.

According to Tourism Research Australia the average backpacker earns $13,300 during their time in the country and is paid a minimum of $22.13 per hour. The organisation has also pointed out that the number of jobs that backpackers traditional do are set to increase in the next four years. The projections says there will be a 12% growth in accommodation and food services by 2020 and 8.4% and 5.8% growth in vegetable and fruit picking jobs over the same period.

{ 1 comment… read it below or add one }

Peter August 18, 2016 at 10:20 pm

“Well underway” alright, it’s over before it’s even started with this bloke in charge.


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