Australian government scraps controversial ‘backpacker’ tax hike proposal

The Australian government has scrapped a proposal to increase taxes paid by travellers on the 12-month working-holiday visa, a proposal nicknamed ‘the backpackers tax’.

Australian government rethinks backpack tax rise.

Australian government rethinks backpack tax rise. Image by Michael Coghlan / CC BY 2.0

At present the first AU$18,000 earned by these workers does not attract income tax as is the case for all workers in Australia . The federal government, looking for ways to increase revenues, proposed that every dollar earned by working holiday makers should be taxed at 32.5%. This proposal was strongly criticised and not just by the tourism industry. Tourist operators believed the change would make Australia a less attractive option for a key market of long-term travellers heading Down Under for gap year style experiences. The agricultural industry also warned that many of their seasonal workers were ‘backpackers’ doing the bulk of labour during crucial harvest times. Many travellers take advantage of the visa rule that allows them to stay in Australia for a second year if they spend at least three months working in rural areas.

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