The introduction of a flat rate backpackers' tax of 32.5 per cent on July 1 this year is causing controversy in Australia. Last week farming groups launched a new public campaign to protest the issue.
Under current working holiday visa conditions, backpackers receive a tax-free threshold of $18,200 then pay 19pc up to $37,000 and 32.5pc up to $80,000.
But the National Farmers Federation and horticulture groups want that threshold deactivated and replaced with a 19pc rate; instead of charging backpackers 32.5pc who make an average $15,000 during their stay in Australia.
Queensland LNP Senator Matthew Canavan said he could not support a tax system which largely allowed working backpackers to pay no tax when they used public facilities like hospitals and roads.
But Senator Canavan said exempting backpackers from paying tax was an “unintended by-product” of increasing the tax-free threshold to $18,200 in 2012.
He said prior to 2012, backpackers would have paid tax and the July 1 change was about “trying to rectify an anomaly”.
“I recognise a tax rate of 32.5pc in the dollar is a big step change and I’ve been putting forward other options to deal with the issue,” he said.
“One option is to use the provisions of the 416 visa seasonal worker program to pay a 15pc rate rather than the non-resident 32.5 rate.
Asked whether he supported softening the tax as demanded in the NFF’s campaign - which includes an online petition surging towards 10,000 signatures this week - Federal Agriculture Minister Barnaby Joyce was coy.
Mr Joyce said if the backpackers don’t turn up they effectively paid no tax “because they’re not there” making any changes “purposeless”.
Queensland Nationals MP Keith Pitt said it was yet to be determined whether the NFF proposal would be implemented by the Coalition government but he said the 32.5pc flat rate needed to be reviewed.
“If we continue to lose the backpacker trade that’s going to hurt a lot of people in the agriculture and tourism industries,” he said.
Victorian Nationals MP Andrew Broad said the new 32pc rate was unreasonable but a 15-19pc flat rate - like the NFF was proposing, with no tax-free threshold – was fairer.
Mr Broad said he contacted former Treasurer Joe Hockey immediately after the tax change was announced in last year’s federal budget to express concerns about potential impacts on farm labourers.
But the former Victorian Farmers Federation President said the NFF had been silent on the issue for 10-months and launching a new campaign last week, in the first parliamentary sitting week of an election year, “reeks of politics”.
Source: goodfruitandvegetables.com.au
