September 27, 2016
• A proposed 32.5 per cent tax rate that was to apply to working holiday visa holders from July 1 will be slashed to 19 per cent following strong representations by The Nationals in Government.
• Australia to remain among the most competitive destinations for working holiday makers.
• From January 1, 2017, the income tax rate for all working holiday makers will be 19 per cent from the first dollar earned up to $37,000, with ordinary marginal tax rates to be applied from $37,001 onwards.
Gippsland producers will continue to attract working holiday makers to fill on-farm skill shortages under changes to the proposed “backpacker tax”.
The Nationals Member for Gippsland Darren Chester said the tax change provided employment certainty, as seasonal workers were a key source of labour in the agriculture, horticulture, tourism and hospitality sectors.
“Working holiday makers fill an important role for local farmers in helping to get their product from the paddock to market,” Mr Chester said.
“Today’s revision of the proposed tax changes will maintain Australia’s place as an attractive destination for working holiday makers, while also ensuring backpackers pay their fair share of tax on their earnings.
“The working holiday visa programme is important for keeping regional economies strong and today’s change is one The Nationals have been strongly advocating for within the Coalition.”
The government will also reduce the application charge for working holiday maker visas by $50 to $390.
In addition, employers with premises in different regions will be allowed to employ a working holiday maker for a total of 12 months, and up to six months in each region.
Tourism Australia will be tasked with promoting Australia to potential working holiday makers through a $10 million global youth-targeted advertising campaign.
The government will increase the tax on working holiday makers’ superannuation payments when they leave Australia to 95 per cent. This is consistent with the objective of superannuation, which is to support Australians in their retirement, not to provide additional funds for working holiday makers when they leave Australia. There will also be a one-off increase to the Passenger Movement Charge of $5 from 1 July, 2017.
At the 2016 election the government committed to review the tax arrangements for working holiday makers by the end of the year.
More than 1700 stakeholders contributed to the review through written submissions and face to face consultations.
Mr Chester said the announcement demonstrated the government listened and was now providing certainty for the upcoming harvest and tourism seasons.
The impact of the changes will be fully off-set, meaning there will be no hit to the Budget bottom line.
Information about the changes will be progressively uploaded to www.ato.gov.au