The Australian federal government has announced that the 32.5% tax rate that would apply to working holiday visa holders will be cut to 19% following opposition from Nationals MPs and farmers
Working holidaymakers will be liable for 19% tax on every dollar they earn up to A$37,000 and then normal tax rates will apply.
Treasurer, Scott Morrison, announced the plans on 27 September after it was signed off by the Committee.
The cut will be funded by a $5 increase in the Passenger Movement Charge (PMC) that applies when people leave Australia, from $55 to $60 and by an increase in tax on superannuation payments to 95%, paid by working holidaymakers when they leave Australia.
The new tax rates will come into force from 1 January 2017.
Deputy prime minister and minister for agriculture and water resources, Barnaby Joyce said the change ‘recognised the importance of keeping regional economies strong’.
Joyce said: ‘The decision to reduce the proposed tax rate from 32.5 per cent to 19 per cent tax maintains Australia's status as one of the most competitive destinations for working holiday makers, while ensuring they pay a fair level of tax.
‘Australia's Working Holiday Maker programme provides a vital source of labour, particularly across the agriculture and tourism sectors.’
Morrison said: ‘We recognise absolutely the important part that backpackers play in the overall tourism industry. It is an important sector for the tourism industry, also a very important source of labour in the agricultural sector, particularly for seasonal labour.’
