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New Tax Laws for Backpackers Disastrous for Australian Farmers

Work on an Australian farm is a rite of passage for many backpackers in Australia, especially those wishing to obtain a secondary year Working Holiday Visa. Australian farmers have come to rely on backpackers as a vital source of their labour force, particularly during harvesting seasons, with backpackers making up about 35 – 40% of the seasonal workforce. However, this source of labour is now being threatened by new tax laws targeting backpackers which are set to come into effect on 1 July 2016.

Currently, the tax-free threshold applies to Working Holiday Visa holders just as it does to Australian workers, meaning they can earn up to $18,200 before they need to start paying tax.  But from July this year, backpackers will lose their tax-free threshold and will pay 32.5 cents tax on every dollar they earn. This translates to them taking a pay cut from approximately $22.62 to $14.59 an hour.

The new tax which is designed to raise extra revenue for the government, will likely deter backpackers from selecting Australia as a holiday destination to begin with, especially as many backpackers already struggle to pay their travel expenses. Countries like New Zealand where backpackers don’t have to pay tax will be a more attractive choice. Many Australian farmers fear that the result will be that their crops will go to waste as they won’t be able to find the needed labour, effectively damaging, and in some cases, ending their businesses.

In response to the new tax, Growcom, the Queensland Farmers Federation and Cotton Australia are launching an intensive lobbying campaign to highlight the impacts on the agricultural sector. The Northern Territory Farmers Association is also involved, liaising with its sister bodies and has expressed concern on behalf of farmers.

Many travellers use their time backpacking in Australia to gain valuable work experience or explore other opportunities for permanent migration. If you’re interested in finding out more about pathways to Australian residency, give us a call on +61 7 3229 4025

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