SAWIA Advocacy: Drop the backpacker tax

Thursday, Sep 22, 2016

In the 2015-2016 Federal budget, the Federal Government proposed to change the tax treatment of the income earned by working holiday visa holders. Popularly known as the “backpacker tax” the proposal involved treating working holiday visa holders as non-residents for tax purposes, thereby taxing them at a rate of 32.5% from the first dollar earned and removing the tax-free threshold.

Following significant opposition to the proposal from a number of industries, the Federal Government has been conducting a public review and consultation of the proposal. SAWIA has participated in the review and public consultation and provided a written submission. The positive impact working holiday makers have on local communities should not be underestimated. They live locally and support backpacker hostels or the local rental market; they shop locally and visit local restaurants, pubs, hotels and tourism attractions.

According to member feedback working holiday makers consistently bring good work ethic and attitude to their work, are reliable and take interest in the work. While it may appear to be an attractive budget saving for the government, working holiday makers will vote with their feet and go to other countries for a combination of work and holidays, where the tax system is perceived to be more beneficial. A likely consequence is that rural and regional businesses, including wine industry employers will be unable to fill vacancies during peak operational periods.

SAWIA submits that the proposed “backpacker tax” should be withdrawn as it will have a detrimental impact on wine industry employers who despite their best efforts cannot fill casual vintage jobs with local applicants.

To date the working holiday stream has been a win-win situation for employers and working holiday makers. It has provided wine industry employers with reliable and hard-working employees, while at the same time enabled working holiday makers to work in their holiday destination, thereby extending their holiday. SAWIA cannot see any reasons to overturn this successful program by the imposition of a different tax regime.