Government places ‘backpacker tax’ on hold

June 7, 2016

The government has confirmed that a “backpacker tax” will not be introduced on 1 July 2016.

In the 2015 Federal Budget, a measure to treat temporary working holiday makers as non-residents for tax purposes was announced. The effect of the measure would result in those individuals being taxed at 32.5% from their first dollar of income (commonly referred to as the “backpacker tax”).

To date, these proposed changes are yet to be enacted into law.

The previously announced changes will be deferred from 1 July 2016 for six months pending the outcome of a review.

Following concerns expressed by the agriculture and tourism industries, Deputy Prime Minister Mr Barnaby Joyce said this tax will be reviewed by the government as part of a broader review of workforce shortages faced by these industries. The review will also assess Australia’s competitive position in attracting seasonal and temporary labour, including comparative wages and taxation.

The review will be of the 417 and 462 Visa Labour which will report by 14 October 2016 enabling any agreed changes take effect from 1 January 2017.

The government had previously announced a review into the tax arrangements for the Working Holiday Maker visa programme on 16 March 2016.

Source: Deputy Prime Minister’s media release and Assistant Treasurer’s media release, 17 May 2016.