Australian Backpacker Tax to Be Set at 15%

November 29, 2016 Taxation in Australia

Backpacker tax in AustraliaCANBERRA – Australia has reached a compromise on its controversial “backpacker tax” which will now be set at 15 percent.

On November 29th the One Nation party of Australia pledged its support to the government of Australia to implement a special tax rate for travellers working in Australia, ending months of debate and controversy on the issue.

Currently, backpackers working in Australia face the same system of personal taxes as Australian citizens, and are not liable for personal income tax until their annual earnings exceed AUD 18 500 per year.

However, in its latest budget proposal the government stated that it intends to see backpackers pay a rate of 32.5 percent from the first dollar earned.

Following the announcement of the 32.5 percent rate, many industry groups voiced their disapproval of the measure, claiming that it would force backpackers to travel to skip Australia, ultimately negatively affecting the local economy.

The rate that the tax would be set at has been subject to significant debate, however, it now appears that over the course of this week the legislation to set it at 15 percent will be approved, to be implemented in the near future.

It has been estimated that reducing the rate of the tax from 32.5 percent to 15 percent will cost Australia as much as AUD 120 million in missed revenues.