"Backpacker tax" still in force after 2016 Federal budget

THE so-called "backpacker's tax" has survived in the 2016 Federal Budget, with the government ignoring growing calls to dump the charge by farmers.

The government decided to crack down on working holiday makers, notorious for leaving the country without paying taxes, by forcing them to pay 32.5c for every dollar they earn up to $80,000.

By comparison, Australians earning less than $20,000 a year enjoy a tax-free income, then pay 19c in the dollar once they cross the threshold.

The taxation arrangements were all-but-ignored in Tuesday's budget papers, except for a single line which read that "working holiday maker negotiations are targeted towards government priorities".

A department official confirmed there was no change to the current tax arrangement.

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Rural producers across Queensland and New South Wales have complained about the government's slugging of working backpackers, a critical source of labour for the horticultural sector that relies on fruit pickers.

Earlier this year the National Farmers' Federation Commission chairman Charlie Armstrong said taxing backpackers at the 19c per dollar rate was reasonable.

He said the current charges would only hurt producers who rely on the labour.

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"The agriculture industry relies on backpackers to fill severe labour shortages which are often seasonal and temporary, for example, when crops are being harvested or milk production is at its peak," Mr Armstrong told Australian Regional Media earlier this year.

"Each year, backpackers contribute around $3.5 billion to the Australian economy and around 40,000 find employment on Australian farms."


The NFF said would-be workers were now opting to work in Canada or New Zealand where they wages - and tax conditions - were better.

In 2015, 606,000 backpackers came to Australia. They spent close to $5295 each.

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