The Backpacker Tax – Yes or No?

The Backpacker Tax – Yes or No?

Nick Robinson

Nick Robinson

May 17, 2016 | Personal Tax

The Australian government recently put forward plans to increase the tax payable by foreign travellers who also work in the country. But, after complaints from native farmers, the tax, known as the ‘backpacker tax’, may now be scrapped, or at least reviewed.

Farmers are worried that if the amount of tax to be paid increases, they won’t be able to find anyone who is willing to do their harvesting work for them when the time comes. It will simply not be worth any traveller’s while to take such a job when so much of their money will go to the government.

And since the Conservative government depends in large part on the votes from rural communities, they have decided to call a review on the tax, and to see if there is a better way to do things. They will reconsider the tax rise in either October or November, after an election that is due to take place on 2nd July.

It isn’t just the farmers who are up in arms about this potential tax; The Green party is also less than pleased about it. They suggest that the government is looking at a short term increase in tax revenue and ignoring the long term implications for the farmers and producers. Of course, they remind everyone, that these long term issues for growers also mean issues for the government that depends on revenue from them.

The proposals for the tax were that anyone working on a holiday visa would have to pay 32.5% on every dollar that was earned, starting on 1st July. The current tax rules are that nothing is due on the first AUS $18,000 that is earned, and only after that figure is the tax payable. This seems to fly in the face of the special visa that is given to travellers who work for three months on a farm. These second visas allow for a second year in Australia. But it is likely that backpackers would rather go home early than pay such a high amount of tax.

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