Here are some news for all people on a Working Holiday Visa in Australia. The Australian government announced some important changes regarding the backpacker tax that they tried to implement for more than a year now. The Government also intend to implement some more changes that will have a positive impact for all people going to Australia on a Working Holiday Visa. Read on to find more about it…
Update 12/10/2016 : the government is currently reviewing the proposed law and should provide its decision regarding the changes on 7 November 2016. We will update you once a decision has been made.
Backpackers to be taxed at 19% from their first dollar earned
In 2015, the latest Australian Government Federal Budget announced that from 1st July 2016, working holiday makers will be taxed at 32.5% from their first dollar earned in Australia. The aim was to remove the backpacker tax-free threshold of $18,200 in place at the time. Increasingly dismayed farmers, tourism operators and regional communities said a 32.5% tax on backpacker labour would greatly harm the industry at harvest time as backpackers make up 25 per cent of the farm workforce each year. After a long debate and backbench and industry pressure, the Federal Government has dumped the budget plan to impose a 32.5% tax on backpacker workers and will cut the backpacker tax to 19% for the first 37.000 AUD earned. When earning more than 37.000 AUD per financial year, backpackers will then be taxed 32,5%. It is a significant backdown for the Government. Treasurer Scott Morrison announced the deal after it was signed off by Cabinet on 27 September 2016.
This new law will be applied from the 1st of January 2017.
Backpacker tax rates
Have a look at the following comparison to understand how much backpackers get taxed at the moment and how tax changes will affect backpackers in the future:
Current tax rate:
0 – 18.200 AUD: 0% (residents) – 32.5% (non-residents)
18.201 to 37.000 AUD: 19% (residents) – 32.5% (non-residents)
37.001 to 80.000 AUD: 3.572 AUD + 32.5% for every $ earned above 37,000 AUD (residents) – 32.5% (non-residents)
80.001 to 180.000 AUD: 17.547 AUD + 37% for every $ earned above 80,000 AUD (residents) – 32.5% (non-residents)
Tax rates for backpackers from 1st of January 2017 :
0 to 18.200 AUD: 19%
18.201 to 37.000 AUD: 19%
37.001 to 80.000 AUD: 3.572 AUD + 32.5% for every $ earned above 37,000 AUD
80.001 to 180.000 AUD: 17.547 AUD + 37% for every $ earned above 80,000 AUD
Other significant changes for backpackers
Visa application fees
The government also tries to attract backpackers coming to Australia by reducing the visa application fees by 50 AUD. Instead of 440 AUD it would be 390 AUD to apply for a X-Working Holiday Visa (417)..
To fund the loss of backpacker taxes, the government will keep 95% of the superannuation (retirement contribution paid by your employer) when leaving Australia – At the moment it is taxed at 38%.
Age restrictions for Working Holiday Visa
On top of that the Government announced an increase of the age restriction for people applying for a Working Holiday Visa to 35 (instead of 30 at the moment). This information still has to be confirmed. Read more about it on The Guardian – It is also also important to note here that even if the government intend to increase the age limit to apply for a WHV, it will take some time to implement it because all participating countries have to agree and amendments signed.
Work for one employer for 12 months
People on a Working Holiday Visa may also have the opportunity to work for the same employer for up to 12 months. But they still have to change the location. So if your employer has two branches in two different states you would be able to work for him for 12 months.
Also note that the departure tax for passengers leaving Australia will increase from 55 AUD to 60 AUD.
Please note that the terms of the new law and its implementations still have to be confirmed! We will provide you with more information as soon as there’s more official news.
Sources: ABC News / SBS News / The Guardian / The Conversation
Last update: 30 September 2016