The Backpacker Tax: An Update

banner_fruit-picking_shutterstockCampaign Banner: YHA Website

The government recently submitted a legislation in Parliament for the revised backpacker tax, this ended months of tumultuous arguments between the coalition partners and significant lobbying by certain lobby groups.

The original plan, which proposed a flat rate of 32.5% for earnings up to 37,000, was supposed to come into effect on July 1, but was postponed for six months after significant pressure during the election campaign. The new plan reduces the rate to 19%, increases the departure tax by $5 for all travellers leaving Australia, and claws back more from the superannuation funds of those leaving Australia after working-holidays.

Australia’s agriculture and tourism industries rely heavily on travellers working in seasonal jobs. There was significant concern that the original plan would leave many regional farming communities unable to fill demand for workers. This, is in addition to the fact that there has been a general decline in working backpackers since 2012/13.

The announcement also contained a raft of other suggested implementations, all in an effort to induce more people to come to Australia on working-holidays. These included the relaxation of certain requirements, extra funds for Tourism Australia to advertise such opportunities, and the maximum allowed age of Australian Working-Holiday Visa applicants being increased from 30 to 35.

To fill the gap from the change in proposal, all travellers leaving Australia will now pay a $60 departure tax instead of $55, which should see a slight increase in international flight costs. Furthermore, travellers leaving Australia after a working-holiday will now pay 95% of their super earnings to tax.

It is unclear if the Opposition will support the changes, having previously indicated that they will refer them to a Senate Committee.