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Aus Backpacker Tax Deterring Tourists, Queensland Warns

by Mary Swire, Tax-News.com, Hong Kong

20 September 2016


The Queensland Government has said that there has been a nine percent decrease in working holiday visitor nights since the federal Government announced plans for a so-called "backpacker tax."

Queensland Tourism Minister Kate Jones said the latest international visitor data shows that the tax is putting off tourists, even before its formal introduction. She warned that the proposal is causing "a direct reduction in backpacker visitor nights."

"In the year to June 2016, Queensland recorded 12.3m backpacker visitor nights, down from 13.5m in the 12 months to June 2015. We also saw the total number of backpackers visiting Queensland drop from 338,000 to 331,000 over the same period," she explained.

The 2016 Budget included a proposal to reform the tax residency rules to treat most working holiday visa holders temporarily in Australia as non-residents for tax purposes. This would have prevented such individuals from accessing the tax-free threshold, meaning that those affected would have been taxed at 32.5 percent on income between AUD1 and AUD80,000 (USD60,251).

Following a backlash, the Government delayed for six months the intended July 1 start date for the measure, and launched a review of the tax rules for those taking up working holiday visas.

According to Jones, the measure "will hurt regional Queensland," where the agriculture and tourism industries "rely on backpackers for seasonal jobs like fruit picking, harvesting, and hospitality." She added that as long as the federal Government "dither[s]" with the policy, backpackers will choose other destinations, such as New Zealand and Canada.

"The backpacker tax doesn't need tinkering around the edges, it must go altogether," she said.

Barnaby Joyce, the federal leader of the Nationals – the junior party in the Liberal-National coalition Government – has said that he hopes there will be an agreement on the policy within a month. He told ABC radio that, together with Treasurer Scott Morrison, he would take a resolution to Cabinet on the issue.

The Government has said that it will announce the results of the review by January 2017.

Speaking at a press conference, Morrison said that the Government will continue to work through the issues raised, and "will certainly act within the time frame we said we would and wherever possible, if we can land that sooner, we will." He emphasized that if there are changes to be made to the policy, "they will be made in a way that does not disadvantage the Budget."

TAGS: individuals | tax | Australia | tax thresholds | travel and tourism | tax rates | tax reform | individual income tax

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