Government proposes new tax arrangements for backpackers

Following widespread stakeholder concern with the Federal Government’s proposal in 2015-16 budget to tax working holiday visa holders at 32.5 per cent from the first dollar earned, known as the “backpacker tax”, the Federal Department of Agriculture has consulted with stakeholders, including the South Australian Wine Industry Association (SAWIA).

During the consultation SAWIA was able to provide practical examples by members of the importance of working holiday visa holders to the wine industry and how the “backpacker tax” would be detrimental to the wine industry. SAWIA argued that the working holiday visa stream has been very successful and that the “backpacker tax” should be withdrawn as it would have a damaging impact on wine industry employers who despite their best efforts cannot fill casual vintage jobs with local applicants.

In response to the review, the Federal Government on 27 September 2016, announced a set of changes to the tax and visa arrangements for working holiday visa holders. The proposal by the Government, includes but is not limited to:

  • withdrawing the original proposal of a 32.5 per cent tax for working holiday visa holders; and
  • introducing a tax rate of 19 per cent from the first dollar earned up to $37,000, with ordinary marginal tax rates applying thereafter.

The proposed changes will require the enactment of laws and regulations. SAWIA will continue to monitor the implementation of the legislation. For more information contact SAWIA on telephone +61 8 8222 9277 or email.