BACKPACKER TAX: The Senate Economics Committee Working Holiday Maker Reform Package hearing is discussing the backpacker tax this week.
BACKPACKER TAX: The Senate Economics Committee Working Holiday Maker Reform Package hearing is discussing the backpacker tax this week. Trevor Veale/The Coffs Coast Adv

Cut tax or miss the flight of backpacker labour

BACKPACKERS are currently working on the Coffs Coast in droves as the blueberry picking season ramps up towards full production.

However, as Federal Member for Cowper Luke Hartsuyker warned today, the future workforce for the Mid North Coast's agricultural enterprises and tourism operators could be jeopardised if the backpacker tax rate is not cut in time for the peak season.

Mr Hartsuyker condemned so called "misinformation" released following a Senate Economics Committee Working Holiday Maker Reform Package hearing, dubbing claims made by the Greens as "irresponsible and dangerous".

Greens treasury spokesperson Senator Peter Whish-Wilson said that should the government's proposed backpacker tax legislation not pass, then the default tax rate for working holiday makers would be zero per cent until they reach the threshold of $18,200.

"The Greens have received advice from the Parliamentary Library and had this confirmed by the ATO at a previous hearing that if the government's backpacker legislation does not pass, then the practical reality is that most backpackers will still be taxed the same as residents," Senator Whish-Wilson said.

"That is, their effective tax rate will be 0% until they reach the threshold of $18,200.

Mr Hartsuyker responded saying that stalling the passage of legislation will mean that almost all backpackers would be liable for the 32.5% tax rate from January 1.

"A 19% tax would deliver a better after-tax income for working holidaymakers, making Australia extremely competitive with comparable nations," Mr Hartsuyker said.

Supporting the Coalition Government's position is Tax Commissioner Chris Jordan who said the amount of tax that a working holidaymaker may pay will depend on their residency status for tax purposes, and we consider the individual circumstances that apply to each working holidaymaker.

"The reality is, what we see is that most working holiday makers are transient - they move around and do not establish residency in Australia during their stay," Mr Jordan said.

The current tax rate for backpackers has been in law since it was increased from 29% by the previous Labor Government as part of the 2012-13 Budget.

The tax-free threshold was also removed from the non-resident tax tables in 1982.

Mr Hartsuyker said that doing nothing or maintaining status quo was not an option.

"If anyone thinks it is doing backpackers or industry a favour by stalling this legislation, they are gravely mistaken.

"More than 1700 stakeholders have contributed to this solution and it is incumbent on the parliament to pass this legislation or provide a clear explanation as to why they have left backpackers with a default tax rate of 32.5% - a rate we know farmers do not want."