'Backpacker tax' changes sought as working tourists threaten to leave Australia

Moves are underway within the Federal Coalition to find a compromise for the controversial 32.5% ‘backpacker tax’, scheduled to take effect in July.

The agriculture industry is worried the tax will cause a labour shortfall and stifle the growth of the nation's $10 billion horticulture sector.

Some rural MPs are questioning whether the proposed tax will generate the full $540 million forecast by Treasury over the next three years.

The change will see overseas visitors on working holiday visas taxed 32.5% from the first dollar they earn, and a scrapping of the $18,200 tax-free threshold.

Liberal Member for Murray Dr Sharman Stone told the ABC “it is the harvest-dependent international backpacker scene that we want to see continue and not suddenly disappear.”

Dr Stone, who also chairs the Coalition's Agriculture Policy Committee, said the tax could generate less income than expected if future working holiday-makers were deterred by the prospect of lower wages.

She explained “we've looked at what the tax take might be as a contribution to the budget, but if we have fewer backpackers arriving that tax take is a lot less when calculated.

"We have been encouraged by the (Agriculture) Minister to look at a package which might make it less a case of the backpacker seeing a third or so of their salary going."

One option being discussed, according to Dr Stone, is changes to superannuation arrangements for backpackers.

Currently working holiday makers have to pay superannuation, but can get some of it back when they leave the country.

Dr Stone added “we also take superannuation off their pay checks which is a lot of red tape, a lot of bureaucracy, and the employer has to contribute to that.

"We are hard at it thinking of how to get around the unintended consequences of the tax take for this category of worker because when it comes to horticulture, our abattoirs our piggeries, our dairy industry, quite frankly we couldn't do without this international labour coming in."

Image courtesy of Cottontree Backpackers.

2nd February 2016 - TOURISM INDUSTRY CALLS FOR SCRAPPING OF BACKPACKER TAX

31st August 2015  - STA TRAVEL LAUNCHES NEW RETAIL OUTLETS TO CATER FOR GROWING BACKPACKER ARRIVALS

15th May 2015 - NEW ZEALAND TOURISM SET TO BENEFIT FROM AUSTRALIAN MOVE TO TAX BACKPACKERS

13th May 2015 - FEDERAL BUDGET BACKS SMALL BUSINESS BUT ADDS TOURISM TAXES