Backpacker’s Tax

The nation’s hotel and tourism associations have welcomed the Australian Federal Government’s announcement that there would be a six-month postponement of the introduction of the ‘backpacker tax’ to allow a ‘whole of government’ review into working holiday visas.

In the 2015–16 Budget, the Federal Government proposes to change the tax status of temporary working holiday makers by removing the tax free threshold from all working holiday makers, effective July 2016. They will now all pay 32.5% in income tax from the first dollar earned.  The government has also increased the working holiday visa fee from $420 to $440.

What does this mean? Backpackers will work and pay but no longer play! This movement will not only affect backpackers but cause difficulties to operators of tourism businesses, particularly those in regional and remote parts of Australia, who rely on overseas visitors to fill positions of employment.

The Australian Federal Government has since announced that there would be a six-month postponement of the introduction of the ‘backpacker tax’ to allow a collective government review into working holiday visas. This delay has been well received by several associations and lobby groups who have made a number of submissions to the Federal Government on the issue, including Accommodation Association of Australia (AAoA). Despite this, the six month delay in introducing the backpacker tax will mean that any changes will come into effect in the middle of summer at the height of the peak tourism season, causing major disruptions across the tourism economy.

For more information on the changed rules for working holiday makers, visit http://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/pubs/rp/BudgetReview201516/Holiday

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