Backpacker tax ‘simply ridiculous’

A new ‘backpacker tax’ has been criticised as “simply ridiculous” for “ripping more than half a billion dollars from the visitor economy”.
The Tourism & Transport Forum (TTF) accuses the Australian government’s budget of hitting tourism with at least $600m in new taxes and charges.
It said that working holiday makers, one of the country’s highest spending categories of visitor, will no longer be treated as residents for tax purposes, removing their eligibility for the tax-free threshold and forcing them to pay tax from the first dollar they earn.
All visitors applying for a visa offshore will also be slugged additional costs for their application charges, with the government raising $437.1 million over four years. Visitors from China will see their application fees increase from $130 to $135, with that market alone footing a $5 million bill, while working holiday makers will be paying an additional $5 million as their application fees increase from $420 to $440.
“With higher taxes and charges and no new money for tourism marketing, Australia is fighting with one hand tied behind its back,” said TTF CEO Margy Osmond.
“Ripping more than half a billion dollars from the visitor economy with a new ‘backpacker tax’ is simply ridiculous.
“Taxing working holiday makers from the first dollar they earn, instead of giving them equal treatment with other resident taxpayers, is a backward step and will damage Australia’s international reputation.
“Australia has long been a favourite destination for young people from around the world who live, work and travel here for up to two years, and who spend on average more than $13,000 during their stay. Coupled with the tenth consecutive increase in their application fees, this new tax on working holiday makers will make them think twice about coming here.
“Increasing visitor visa application charges is sending Australia in the wrong direction. With fierce global competition for the visitor dollar, jacking up the cost of visa applications is an enormous own goal. The tourism industry has argued that its vital Australia should be reducing the costs of visas from key markets, like China, to increase our appeal in the face of proactive visa reform by many of our major competitors.”

14 thoughts on “Backpacker tax ‘simply ridiculous’

  • May 13, 2015 at 10:10 am
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    The Working Holiday visa fee was already too high and combined with the increased tax, it really puts us behind the pack when it comes to attractiveness as a long term backpacking destination. Canada/NZ will be loving it. As Osmond says, an extraordinary own goal.

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  • May 13, 2015 at 10:38 am
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    I couldn’t believe this when I heard it.

    This is going to hit the backpacker tourism sector HARD.

    Backpackers are going to have a lot less ready money to spend, meaning they will be even more price conscious than they already are.

    They’ll be less likely to splurge on tours and seeing all that the country has to offer, as well as looking to save money on hostels by using more services such as Airbnb or going for the cheapest accommodation they can find.

    This is going to hurt.

    Backpackers are already among the most exploited workers in Australia and now on top of that they are now going to be taxed 32.5% for every single dollar they earn.

    I really think this is poorly thought out and the impact will be felt across the whole tourism industry.

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  • May 14, 2015 at 9:30 am
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    Nothing good or smart in this decision for tour operators or anyone in the backpacker adventure industry….

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  • May 14, 2015 at 11:07 am
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    I couldn’t agree with Thomas more, the impact of penalising Backpackers through applying an automatic higher rate of tax will be felt throughout so many Australian industries, why do backpackers take the work that Aussies are not willing to take on, simply because they are willing to do the unusual hours and the jobs that we do not want to do.

    Changing Backpackers taxes to 32.5% from the first dollar does not bring them in line with Australian tax payers. An Australian resident for tax purposes enjoys a tax free threshold of $18.200 and then they pay 19% tax- not 32.5%. So be under no illusion around the change being made to create a “level playing field” – it is designed to penalise non-voting visitors.

    The government has estimated raising $220 million in additional taxes per year from 2017 financial year, but they have failed to account for the inevitable drop in visitor numbers and the likely increase in cash in hand work. When visitor numbers drop and the supply of willing workers falls there will be so many economic losers ranging from Bars, Farms, labouring companies all the way through to tour operators and accommodation providers.

    These changes will come into effect unless we all write to our local federal member of parliament opposing the proposed changes. The government is targeting a non-voting group, we the voters need to show them how these changes will affect our business and therefore will affect our votes.

    Find your MP here- http://www.abc.net.au/tv/qanda/find-your-local-mp.htm#electorates

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  • May 14, 2015 at 2:37 pm
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    shake my head in disgust..
    how can govt ignore how many $$ these very backpackers spend during their long term stay in OZ ! and their contribution to the rural economy providing much much needed labour. Should be encouraging more of them, not less !!

    can already see the cash economy getting another kick along ! leading very easily to even more exploitation from the unscrupulous.

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  • May 14, 2015 at 3:08 pm
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    $20 is nothing! I will not stop them coming! In their currency it is the same as what it was last year.

    Half of them litter many destinations around Australia – which we all pay to collect.

    I do not agree that this will hit the industry hard at all. For most they’ve already made the decision to come, before they find out the cost…

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  • May 14, 2015 at 4:56 pm
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    Yes i think this is a step in the wrong direction, as already said NZ AND CANADA will be getting more tourists, NZ is already far more backpacker friendly than new south wales anyway…
    THINK again please and change this bad thinking…mike

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  • May 14, 2015 at 6:19 pm
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    It’s very simple, it’s because they are ‘foreigners’ the assumption is nobody will care, and they can’t vote.

    Should not be surprising after 15 years of dog whistling on visas, immigration, 457s, WHVs, students, and population growth/NOM net overseas migration etc….

    The NOM has been used as a weapon by anti-immigration advocates and/or bigots by making correlations with e.g. unemployment, and having media describe those in the NOM as ‘immigrants’ to create alarm, suggesting it’s uncapped runaway infinite immigration…..

    The UK is planning to remove students from the NOM to stop ‘torrid and emotional’ debate, Australia could follow suit and also exclude 2nd year WHVs?

    Why do travel and education industries stand and watch these negative changes? In my opinion the ‘top people’ don’t understand and/or either don’t feel empowered to complain…..

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  • May 15, 2015 at 4:19 am
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    A short sighted attempt to raise tax revenue from a non voting group. Isn’t the name in the visa ? A working holiday visa not a “working, get overcharged and taxed so you cannot enjoy your holiday visa and leave with a bitter taste in your mouth visa”.

    Australia Government has to remember that it has reciprocal working holiday agreements with many other countries whom recognise the value they bring and the money injected into the economy. The Uk tax the Australian working holiday makers as normal resident as do many other countries so why would Australia feel tat they can charge such high taxes. I’m sure if the tables were turned and the same tax implications were imposed on Australian working holiday makers in the Uk etc the Australian Government would be up in arms.

    It is not as if backpackers do not pay their fair share of tax. Many are highly skilled and pay significant tax under the normal resident tax rate bands. Those that earn under the tax free allowance and get full refunds typically then spend that refund money in Australia benefiting the economy, local businesses and increasing profits for backpacker industry businesses and in turn the amount of corporation tax these backpacker companies pay so overall is tax revenue really lost under the current set up?

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  • May 15, 2015 at 5:19 am
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    In regards to the ABC article on the matter

    http://www.abc.net.au/news/2015-05-14/backpacker-tax-grab-hurts-rural-towns-and-farmers/6469910

    1) Agricultural Minister Barnaby Joyce comments “Australians have to work a full year to get the tax-free threshold. It does seem a little bit incongruous that someone can work three months, four months, five months and get the tax-free threshold.”

    INCORRECT – Australians get a $13464 tax free regardless if they work one day or one year. The remainder up to $18,200 is made up form the number of months in the country . Australians do not need to work a whole year. It is exactly the same rules for backpackers whom are deemed resident for tax as it is for Australians.

    2) Wayne Kraft has owned a popular Alice Springs steakhouse for 25 years which relies on overseas workers during busy periods.

    “In the big picture, I don’t think [the tax measures] will have too much of a dramatic effect,” he said.

    “If they earn more than $400 dollars per month, we are obligated to contribute to their super fund and on the way out of the country they get all that money back.”

    INCORRECT – The government tax the super refund at 38% which cannot be reclaimed

    Good to see our politicians are so well versed in their own tax system and that backpacker employers are so caring over their staff !

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  • May 19, 2015 at 3:17 pm
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    I spotted these worrying mistakes too Dave, good on you for pointing them out !!

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  • May 28, 2015 at 7:50 pm
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    Well, guess what!!! the NZ Government has done pretty much similar with the new “surprise new passenger levy”..

    The English Government tried to implement a similar tax and where laughed out of Government some time ago (iffn my old memory is thinking rightly).. Will have to have a look and see if we can do the same things here..

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  • June 2, 2015 at 10:42 am
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    In Latin American Internet forums specialized in the Working Holiday visa, the news has been taken with great concern; Having a higher tax burden on residents in Australia not only undermines the sense of a Working “HOLIDAY” visa, but also seems to be discriminatory against a workforce that has no say. Many young people interested in traveling to Australia next year (including me) to work and save money to continue traveling or return the money (and tax refunds) to their countries of origin, they are simply changing his mind and looking at countries like Canada, New Zealand etc. while not paying the salaries that if paying Australia, they don´t appear to have launched an offensive against the backpackers, who seems almost to want to discourage them from working in their country; It is something that goes beyond the huge loss of money means new tax rates and pay from the first dollar.

    We hope you can come back to discuss this and find a solution that is beneficial to us as “backpackers” for the agricultural and tourism sector of Australia and Australia in general.

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  • November 22, 2016 at 11:46 pm
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    Tax rates should be uniform for everyone. Let them keep and have access to their super. If you go anywhere on a working holiday you should be able to afford it. Keep things simple and fair.

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