The recent announcement that the Coalition Government will cut the proposed backpacker tax from 32.5 per cent to 19 per cent from 1 January 2017 is good news for the Parkes electorate.
The Government recognises that working holiday makers are an important part of Australia’s $43.4 billion tourism industry and a key source of labour, particularly in the agriculture, horticulture, tourism and hospitality sectors. We also recognise, as do stakeholders, that working holiday makers should pay fair tax on their earnings.
The Government’s package of reforms to working holiday maker arrangements will not only ensure working holiday makers pay fair tax on their earnings but also increase Australia’s attractiveness as a top destination for backpackers.
Australia’s Working Holiday Maker programme provides a vital source of labour, particularly across the agriculture and tourism sectors.
The proposed 32.5 per cent tax rate that was to apply to working holiday visa holders will be slashed to 19 per cent following strong representations by The Nationals in Government.
More than 1700 stakeholders contributed to a review into the tax through written submissions and face to face consultations. They made it clear that an early resolution to the tax rate issue was needed.
The outcome has been made with an informed understanding not only of the labour challenges facing our agriculture and tourism sectors, but also the challenges facing the Australian economy in a global labour market.
The review was about more than the tax rate, and the government will continue to consider a number of issues and suggestions that emerged through the review process.
The new package contains the following key elements:
• Introduce, from 1 January 2017, a 19 per cent tax rate on all working holiday makers from the first dollar of income up to $37,000, with ordinary marginal rates applying from $37,001;
• Reduce the visa application charge for working holiday makers by $50 to $390;
• Provide $10 million in additional funding for Tourism Australia for a global youth-targeted marketing campaign; and allow working holiday makers to stay with one employer for up to 12 months, as long as the second six months is worked in a different region.
As part of our reform package the Government will also work to progress raising the age limit requirement of 417 and 462 visas from 30 years of age to 35.
This will require bilateral discussions with partner countries which the Government will commence working through.
The Government is also aware of concerns about exploitation of working holiday makers.
To generate more accurate data and boost integrity of the scheme by preventing exploitation of working holiday makers, their employers will be required to undertake a once-off registration with the Australian Taxation Office.
This simple and easy registration process will help provide valuable data on the employment of working holiday makers, what sectors they are engaged in and where the employers are located.
Employers who do not register will be required to withhold tax at the 32.5 per cent rate.
Working holiday makers will be made aware of registered employers via the publication of a list on the ABN Lookup.
Information about the changes will be progressively uploaded to ato.gov.au