Wool and livestock producers welcome backpacker income tax concessions

Sheep Central, September 28, 2016
Welsh backpacker Sian Pierce at work in the Burbidge woolshed.

Welsh backpacker Sian Pierce in a NSW woolshed.

WOOL and livestock producers have welcomed a Federal Government decision to reduce the proposed backpacker tax rate of 32.5 percent to 19pc, but remain opposed to proposed superannuation changes.

Treasurer Scott Morrison said from January 1, 2017, the government will set the tax rate for working holiday makers at 19pc on earnings up to $37,000, rather than the 32.5pc announced in the 2015-216 Budget, with ordinary marginal tax rates applying after that.

The government will also reduce the application charge for working holiday maker visas by $50 to $390. Tourism Australia will be granted $10 million to promote Australia to potential working holiday makers through a global youth targeted advertising campaign.

WoolProducers Australia chief executive officer Jo Hall said the announcement provided long term certainty for Australian farmers and for overseas working holiday makers considering agricultural work.

WPA said backpacker labour is playing an increasingly important role in Australia’s wool industry, in on-farm and wool harvesting sectors, with many wool growers, and shearing and livestock contractors, relying on backpackers to fill the employment shortfall in this area.

“The reality is that the wool industry, particularly in pastoral areas need access to backpacker labour and the proposed 32.5pc tax on this labour source had the potential to have a hugely detrimental impact on attracting these people to the agricultural industry,” Ms Hall said.

The Federal Government backdown on the backpacker tax followed a campaign led by the National Farmers’ Federation and Nationals lobbying. The NFF and the Victorian Farmers Federation had also advocated the 19pc tax rate.

VFF Horticulture Vice President Emma Germano said it was fantastic the Federal Government had taken the federation’s concerns on board.

“The proposal originally put forward by the government would have been a massive drain on two of our biggest industries – agriculture and tourism – because working holiday makers bring in about $3.5 billion to the Australian economy every year, but now we can breathe a sigh of relief.”

The changes announced by Mr Morrison also included:

  • Requiring all employers to register with the Australian Tax Office to ensure the 19 per cent tax rate is met;
  • Extending the time backpackers can work for the same employer from six months to 12 months
  • Extending the eligible age of visa sub-class 417 and 462 holders from 30 to 35 years.

However, Ms Germano said the VFF had concerns about the government’s plans to tax backpackers 95pc on any superannuation they accrued while working in Australia.

“We were told at the roundtable discussions industry had with government earlier this year that super was off the table, and not to make any recommendations on this area,” she said.

“But now Treasurer Morrison has announced a large-scale reform to super and we would appreciate the chance to respond.”

Currently tax paid by Working Holiday Maker visa holders depends on the box they tick on the Taxation Declaration form, which means that in some cases visa holders can end up paying no tax in Australia.

“We have always said that if backpackers want to work in Australia, they need to be taxed like the rest of us, but the government needs to be reasonable in its approach,” Ms Germano said.

The Turnbull government will also require the employers of working holiday makers to register with the Australian Taxation Office. Employers who do not register will be required to withhold tax at the 32.5pc rate. Working holiday makers will be made aware of registered employers via the publication of a list on the ABN Lookup. There will also be a one-off increase to the Passenger Movement Charge of $5 from July 1 2017.

Deputy Prime Minister and Minister for Agriculture and Water Resources, Barnaby Joyce, and Assistant Minister to the Deputy Prime Minister, Luke Hartsuyker, said the changes recognised the importance of keeping regional economies strong.

“The win on backpacker tax is a win for our farmers who can get their fruit off the tree, off the vine and off to market,” Minister Joyce said.

Information about the changes will be progressively uploaded to


Your email address will not be published. Required fields are marked *

Your comment will not appear until it has been moderated.
Contributions that contravene our Comments Policy will not be published.


Get Sheep Central's news headlines emailed to you -