“Unfortunate” Backpacker Tax Now Modified

The proposed 32.5 per cent tax rate that was to apply to working holiday visa holders from July 1, 2017 will be cut to 19 per cent following strong representations by Liberal National Senators and Members.

Northern Australian Liberal National Senator Ian Macdonald said he was pleased that the Executive had listened to representations from Warren Entsch, George Christensen and himself. 

“But I am still very annoyed that we had to go through an election with the last proposal which cost us support on polling day. 

“I am angry that relevant Ministers did not understand the impact of the Backpackers’ Tax on rural industries and the tourism/hospitality industry, particularly in Queensland.

“Tourism/hospitality and agriculture are foundational to the economic health of communities across regional Australia,” Senator Macdonald said.

Senator Macdonald said the decision to reduce the proposed tax rate from 32.5 per cent to 19 per cent will apply to all Working Holiday (417) and Work and Holiday (462) visa holders and will help to keep Australia “top-of-mind” as a destination for working holiday makers. 

“I am pleased with the government’s proposal to actively promote Australia as a destination for working backpackers, and I think the reduced application fee, and the extension of time for working holiday makers working if different regions, will also be of help.

“But I think the superannuation accrued by Working Holiday (417) and Work and Holiday (462) visa holders should be paid to them as wages rather than as super, and it should be included in the tax mix. Backpackers will spend that money in local communities and it will circulate in local economies.

“I will seeking advice from the Agriculture Minister on how increasing the retained component of working holiday-makers’ superannuation from 38 cents to 95 cents per dollar will help promote Australia as a destination for working holiday makers. Perhaps this is in line with what happens in other countries but I will be seeking further confirmation of that.

“I am also disappointed about the need to increase the passenger movement charge to pay for these new arrangements.

“International tourism is a very competitive business and any dis-incentive for foreign visitors to come to Australia will not assist Australian industry, or government revenue,” Senator Macdonald said.

Information about the changes to Working Holiday Visa tax arrangements will be progressively uploaded to www.ato.gov.au.

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