Australia lowers new backpacker tax rate to 19.5 per cent

Farmers objected to proposed tax of 32.5 per cent on every dollar

Photograph: iStock

Photograph: iStock

 

A proposed tax on working holidaymakers in Australia has been lowered, bringing (relatively) good news for Irish backpackers heading down under.

New tax rates to be introduced from January 1st 2017 will see overseas visitors with Working Holiday (subclass 417) visas paying tax of 19.5 per cent on every dollar earned, down from the Australian government’s original plan to impose a 32.5 per cent tax.

The rate was lowered by Australian Treasurer Scott Morrison, following opposition from the agriculture and hospitality sectors who raised concerns about labour shortages.

Foreigners on working holidays currently pay no tax on their first 18,200 Australian dollars in income, and a 19 per cent rate on earnings up to 37,000 dollars.

Organisations working with Irish people in Australia have predicted that the proposed tax hikes will greatly reduce the country’s attractiveness as a destination for temporary Irish workers.

Australia has encouraged backpackers to work on farms with special visas allowing them to stay for a second year if they do three months work in rural Australia. But farmers said the 32.5 per cent tax proposal would deny them important workers.

Farmers said the higher tax would discourage holiday workers who make up the bulk of fruit pickers at harvest times, threatening the country’s fruit industry, which is set for record exports of A$2.27 billion ($1.74 billion) next season.

Mr Morrison said the “government is frustrated” at the difficulties in getting locals to work in many parts of Australia.

“But those who run the businesses and have to pick the fruit and have to ensure they get their product to market, well, they don’t have the luxury of waiting for someone to come and take that job.”

The number of Irish people travelling to Australia on Working Holiday Visas has already been falling dramatically in recent years, even before the tax changes are introduced.

In the 12 months to June 2015, just 7,894 Irish people were granted a Working Holiday Visa, down from 12,004 the previous year and 25,827 in 2011/12.

Additional reporting: Reuters

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