The backpacker tax has been discussed for several years in Australia. The debate started a couple of years ago and was finally settled by reaching a compromise. Here are all the information you need to know about it.

Backpacker tax since January 2017

The controversial tax rate has created numerous debates in the Australian government during the recent past years. An agreement has finally been found on a 15 % tax for all backpackers working in Australia (from the first dollar earned).

Discussion Process

Initially the Coalition wanted backpackers to pay 32.5% rate on their earnings. Pushed by Farmers and the Tourism Industry fearing a shortage in backpacker labour, Coalition agreed to reduce it to 19%.

The 15 % tax rate didn’t pass when first presented to the Senate. The Labour Party, favourable for a 10.5% backpacker tax rate, refused to give its support. It promoted a 10.5% tax rate, more competitive and better for the Australian international reputation. No decision was reached, leaving backpackers, farmers and the Tourism Industry in doubt.

The backpackers tax rate has been debated for 18 months and the agreed rate at 19% is seen as a victory for farmers. Reducing the rate from 19% to 15% is costing approximately 120 million dollars on the Federal budget but should not create a shortage in labour. 

Previously, working holiday makers could claim residency for tax purposes. Therefore backpackers were most of time able to claim the tax-free threshold for the first $18,000 earned (as australians). With the new system, backpackers are not able to be resident for tax purposes, meaning that they are now taxed at 15% on the 1st dollar earned.

Tax rate for Backpackers since January 2017

The backpacker tax rate came into effect in January 2017.

Since then Visas 417 and 462 are taxed 15% for the first $37000 of their income. Over this amount, they are taxed 32.5% as any Australian.

It is also important to note that the tax rate applied to the superannuation has been increased at the same time. Indeed, after leaving the country, you will be able to claim your superannuation back BUT it is now taxed at 65%. 

For more information on superannuation in Australia : How to claim your superannuation leaving Australia

How to claim your Tax Back 

The Australian financial year runs from 1st July to 30th June each year.  Tax returns can be lodged  any time from 1st July to 31st October, for the previous financial year.

For more information and the process to follow to claim your tax back, visit How to claim your tax back in Australia

For more information on the backpackers tax : AOT website
Updated on 23/09/2019 – Initially published on 27/11/2016