Taxpayers welcomes government’s rethink of backpacker tax

Taxpayers Australia welcomes the Federal Government’s decision to reconsider its stance on taxing holidaymakers from the first dollar earned and forcing farmers to collect withholding tax from their non-resident casual workers. Taxpayers welcomes government’s rethink of backpacker tax

Current rules entitle the so-called “backpackers” to a tax free threshold, ensuring a stable source of labour for businesses in remote areas, especially farmers during picking season.

A new measure forcing famers and other remote businesses to collect tax from non-resident workers – “the backpackers” – was included in the Federal Budget for 2015-16. This budget measure would mean working holidaymakers would be hit with a 32.5% tax on their earnings. They would also be subject to a 35% tax on employer superannuation contributions when they leave the country.

This measure is due to apply from 1 July 2016, but its future is now in doubt because of yesterday’s announcement from the government.

Moti Kshirsagar, Taxpayers Australia’s chief executive officer, said that the new “backpacker tax” will make life tougher for those on the land while adversely impacting tourism in Australia.

“Allowing backpackers to benefit from the tax free threshold creates an incentive for the tourist to seek casual work in Australia while alleviating some of the pressures faced by farmers in finding casual labour when they need it most,” said Kshirsagar.

“Such a tax may most likely discourage travellers from embarking on a journey into the farming regions, thereby reducing that source of labour.”

Kshirsagar also said that an introduction of the “backpacker tax” could create undesirable consequences such as an increase in the cash economy.

“What are farmers supposed to do? They have to get their crops picked in a timely manner and backpackers are basically providing an essential service.  Most farmers don’t have any other choice of labour,” said Kshirsagar.

“The lifestyle they lead is tough enough already without there being a need for the government to complicate it further with unnecessary bureaucracy and red tape.”

ENDS

Note to editor: If you’d like more information about this topic or to schedule an interview with Taxpayers Australia’s Business Services Manager, Lisa Greig, please call her on (03) 8851 4505 or Roseann Tanner on (03) 8851 4504 or email rtanner@taxpayer.com.au.

Taxpayers Australia is a not-for-profit organisation committed to a fairer and more transparent taxation system for every Australian taxpayer. Its aim is to provide taxation practitioners, superannuation professionals, small businesses and individuals with up-to-date, informative and above all understandable information about taxation – to ensure that every Australian pays the right amount of tax and not a cent more.

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