Govt relents on backpacker tax

Rueben HaleCountryman
The Government has announced that working holiday makers would be taxed 19 per cent from 1 January 2017 instead of the originally proposed 32.5 per cent.
Camera IconThe Government has announced that working holiday makers would be taxed 19 per cent from 1 January 2017 instead of the originally proposed 32.5 per cent. Credit: Countryman

Farmers reliant on foreign labour have welcomed the announcement that the proposed and highly controversial “backpacker tax” will be implemented at a reduced rate of 19 per cent.

First flagged in the 2015 Federal Budget, the measure had originally been set to tax working holiday makers as non-residents at a rate of 32.5 per cent.

However, the agricultural community, fearing its temporary workforce would be decimated because of a lack of overseas visitors, strongly opposed the measure. This opposition included a petition that attracted about 50,000 signatures.

Further changes to the proposed tax will see the Working Holiday Visa application fee reduced by $50 to $390, an increase in age eligibility from 30 to 35 years and the ability for workers to be employed by one employer for up to 12 months at two separate locations.

WAFarmers chief executive Stephen Brown hailed the Government’s decision as a significant win for industry.

"There have been 16 months of uncertainty since the proposal was introduced in the 2015-16 Federal Budget," he said.

"WAFarmers, alongside the NFF and industry stakeholder groups, have done our part to highlight how the introduction of the backpacker tax would not only harm the agricultural industry but also tourism and rural and regional businesses, and we are pleased these considerations have been taken on board.

"Given backpackers contribute about $3.5 billion to the Australian economy and boost both productivity in the agricultural sector and tourism spending, the original proposal had the potential to cause significant damage.”

Mr Brown said while the ideal outcome would be for the tax to be abolished entirely, a reduced tax rate of 19 per cent was a fair compromise.

"Increased competitiveness in application fees and age eligibility will work towards securing a workforce that continues to see Australia as a destination of choice," Mr Brown said.

"We have always considered a 19 per cent tax rate to be a reasonable concession, and we look forward to working alongside Government to ensure our supply of working holiday-makers not only continues but thrives.

"We eagerly await the Federal Government legislation which will clearly outline the full range of changes and the implications."

“It took the Government a long time to make a very straightforward decision, however we are very pleased by the outcome,” Pastoralists and Graziers Association president Tony Seabrook said.

WoolProducers Australia chief executive Jo Hall said the wool industry, particularly in pastoral areas, needed access to backpacker labour.

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