Backpacker Tax Submission: No more red tape is needed

Tuesday, Oct 18, 2016

The Federal Government in September 2016 announced that the so called "backpacker tax" would be withdrawn and more favourable arrangements would be legislated, including a lower tax rate and more flexible visa rules to support industry. The South Australian Wine Industry Association has made a submission to the Senate inquiry into the Government's Backpacker Tax Reform Package.

SAWIA's submission highlighted the importance of working holiday makers (backpackers) to parts of the wine industry and argued that the backpacker tax (as originally proposed) of 32.5% from the first dollar earned was misguided.  

The new tax rate of 19% from the first dollar earned up to $37,000 with ordinary marginal tax rates applying thereafter is significantly more attractive than the original proposal. The proposed tax is likely to be a lesser distinctive for potential working holiday makers to come to Australia and take up casual vintage work in the wine industry. 

The submission also supported the modification of the rules for the Subclass 417 (Working Holiday) visa and Subclass 462 (Work and Holiday) visa to enable working holiday maker to remain with same employer for up to 12 months (currently a maximum of 6 months) provided the second six month period of employment is an a different region. 

However, SAWIA argued against the proposal to add more red tape and compliance costs on wine industry employers utilising the working holiday makers by requiring employers to register with the Australian Taxation Office (ATO). 

SAWIA's full submission is attached.