Mixed bag inside the backpacker tax

by Paul Bidmeade

The Australian Federal Government’s 2015 budget will force those on a 417 working holiday visa to pay more tax.

The working holiday restrictions will come into effect next year.

Starting on July 1 2016, those on a working holiday in Australia will be forced to pay 32.5 per cent tax from their first dollar earned.

However backpackers who work in the same place for six months will be classed as residents, meaning they will enjoy a tax-free threshold and a lower rate of 19 per cent for income up to $37,000.


Treasurer Joe Hockey said the backpacker tax is the key pillar in his plan for a fairer tax system.

Yet international media has predicted that the tax will scare backpackers away.

The Irish Times reported that “Australia might just have taxed itself out of the backpacker business.”

Mr Hockey predicts that the backpacker tax will raise $540 million over the next four years.

Margy Osmond, CEO of the Australian Tourism and Transport Forum has labelled the backpacker tax “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,” she said.

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