Backpacker Tax – what is happening here?
If you’re planning on visiting Australia or coming on a working holiday visa than the implications and costs of that are something you’re going to need to inform yourself on especially when it comes to backpacker tax.
Unfortunately, these conditions keep changing! But that’s why we work hard here at myAustraliaTrip to keep you in the loop on all these irritating changes so you know what you’re getting yourself into.
The Back Story
There was a bill introduced that said from July 2016, any travellers to Australia on a working holiday visa would be required to pay 32.5% for ever dollar they made, whereas before they had $18,000 tax-free.
Travellers were angry, the tourism industry was angry, suffice to say, lots of people were angry over this tax.
And rightly so. A tax like this discourages people from coming to Australia—at the end of the day people come to Australia to work and travel and if a third of their income just disappears than they takes away the shine of coming to Australia to work to begin with.
This affects the tourism industry in turn, and also affects farms that rely on short-term, seasonal backpackers to do the necessary work to keep them functioning properly.
So What’s Happening Now?
Well, after a lot of uproar over the tax, the federal government decided to drop the tax to only 19%. This was an improvement over the 32.5% for sure, but people still thought this was a very high tax to impose on working holiday travellers, and ultimately they believed this was going to discourage people from coming to Australia.
Yes it was a drop, but was it big enough?
After even more debate, the federal government has finally decided to drop the tax to 15%, which is significantly more reasonable than their initial suggestion of 32.5%.
Dropping nearly half of what they had initially proposed means there’s a good chance they won’t be willing to negotiate further down, but you never know.
Right now, as a working holiday traveler to Australia you will pay 15% of your income in tax to Australia. Is it a bit high, yes, but it isn’t prohibitive.
In addition to the drop in backpacker tax, they have increased the Passenger Movement Charge—so that includes all travellers to Australia—$5, from $55 to $60.
However, this is built into airline fares so there’s a good chance you’d never even know the difference.
This drop in the so-called backpacker tax is a welcome change and should they choose to drop it even further we’ll all be celebrating, but for now, you’ll be paying just 15%.
So – nothing to stress about! Australias wages are still super high and this tax won’t effect your earning potential. So get booking your travel to Australia!
Remember, if you are looking at coming to Australia for work I have partnered with Jobs 4 Travellers to give you guys a special offer to get you into employment as soon as possible and to get some great assistance to get you settled.
Use MYAUSTRIP1 for a 10% discount on standard membership – so it is reduced to $31.50 and you will get 12 months job assistance and loads of other goodies.
Or use MYAUSTRIP2 – and you get a 10% discount on the “Ozzie Starter Pack” which includes standard membership plus TFN and bank account set up – so it is reduced to just $50. A bargain! Remember this is exclusive to readers of myAustraliaTrip.
What do you think? Anything I missed? Does this effect you or your decision? I would love to hear in the comments below!