No ‘Backpacker Tax’ in Australia: Know More About It

backpacker tax

The Australian government is reviewing its backpacker tax proposal following the reports of farmers who complain about labour drought in the nation during harvesting season.

Tourism Minister Richard Colbeck confirmed that the government is reviewing the tax proposal that demanded travellers on working holiday visas to have 32.5 cents deducted from every dollar earned. Backpackers were previously exempt from taxes on their income if they do not earn more than $18,000. The backpacker tax proposal is being reconsidered, keeping in mind the farmers who said that a change in tax laws for backpackers might harm their labour supply as the majority of fruit pickers during harvest times are workers on holiday visas.

SBS Australia reported that upon seeing the impact of the tax on tourism and the agriculture sector, the federal government has put the proposal on halt. Colbeck confirmed that Prime Minister Malcolm Turnbull has given him the green signal to work in collaboration with agriculture, employment, immigration and industry ministers to figure out an alternative to the backpacker tax and consider the foreign workers as non-residents to take effect starting July 1.

“We recognise that the workforce is vital to two of our super growth sectors,” Colbeck told the Destination Australia tourism conference held in Sydney on Wednesday.”There have been legitimate concerns raised so we’ve decided the proposed tax arrangements require further discussion to ensure we don’t lose our market share in this space.”

Australia has been encouraging backpackers to work on special visas. The foreign workers are allowed to stay for another year to work in the nation in case they work in rural areas for a three-month tenure. Every year, the backpackers spend around $4.3 billion for their stay in Australia, which will be affected by the imposition of tax on the tourism sector.

The Tourism and Transport Forum lobby group praised the step of reviewing the tax proposal by the government. “It makes no sense to slap a 32 percent tax on backpackers when they have an entire world of destinations from which to choose,” TTF Chief Executive Margy Osmond said as quoted by Sky News. “The backpacker tax is poised to smash the workforce for tourist operators who rely on working holiday makers in seasonally sensitive and remote regions, where a local workforce simply isn’t available.”

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