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Australian government set to impose lower ‘backpacker tax’

The Australian government has outlined plans to support a 15% tax rate on working holiday visitors from overseas.

It’s a mixture of good and bad news for potential travellers, as the government had originally planned for a 32.5% rate – dubbed the ‘backpacker tax’. However after fears were highlighted by farming and tourism operators that rate has now been reduced.

They believed that taxing temporary workers 32.5% on their earnings would make it really unattractive to potential travellers looking to visit Australia.

Taking low-paid job roles is prevalent among young travellers who see it as an option of funding their holidays.

Figures show that around 600,000 backpackers travel to Australia every year, with many of them finding employment picking fruit.

As it stands, backpackers are considered the same as Australian workers, whereby they are not required to pay any tax on their earnings until their yearly income is higher than AUD 18,200 (c. £11,000).

The government is set to begin working on a bill which will propose a 15% ‘backpacker’ tax following a debate with independent crossbenchers.

It has taken more than a year of political debate between minor parties, opposition and the government for the announcement to be made.

Despite the agreement, Treasurer Scott Morrison believes that lowering the rate to 15% would cost the Australian budget AUD 120m (c. £72 million) over four years.

New Zealand already has a tax for those on working holidays but its lowest rate is less than the proposed rate for Australia.

In 2014-15, Australia approved 214,830 working holidays, with British citizens – the programme's biggest constituency – granted 44,730 visas.

Australian working holiday visas cost a minimum of AUD 440 (£250) and are hugely attractive to British travellers as they provide them with the option to fund their travels.

If you’re thinking of travelling abroad this year, be sure to organise your student travel insurance in advance. 

Date Created: 29 November 2016

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