The Federal Government had proposed to remove the tax free threshold from all working holiday makers which would have been effective from July 2016. A review, however, has delayed the introduction of this proposed change. If the backpacker tax is adopted, backpackers would pay 32.5% in income tax from the first dollar earned. The government has also proposed increasing the working holiday visa fee from $420 to $440.
Backpacker visitations play a significant role within Greater Shepparton’s economy and supports several industries and sectors such as (but not limited to) agriculture, horticulture, dairy, tourism and retail.
In anticipating potential impacts of this decision, horticulturalists and related industries were provided with the opportunity to discuss their concerns with The Nationals Senator for Victoria Bridget McKenzie, The Nationals Candidate for Murray Damian Drum, Greater Shepparton City Council Mayor Cr Dinny Adem and CEO Peter Harriott.
The forum was well attended by local orchardists, Fruit Growers Victoria, harvest labour organisations, retail and tourism representatives. Concerns discussed included the possibility that the proposed changes to the tax may encourage illegal employment arrangements, it’s another challenge that growers would need to face alongside water uncertainty, and it could be a deterrent for working holiday makers to come to Australia therefore reducing the available seasonal workforce.
“Backpackers increased our local population by 10% over the summer months and provide a value source of labour for our horticultural industry”, explains Greater Shepparton City Council Mayor Dinny Adem. “The current arrangement isn’t broken so it’s frustrating that the Federal government are trying to impose a tax that threatens the potential livelihood of our growers and other related industries.”
“The motivation of introducing this tax is unclear, however if the aim is to raise revenue, this scheme may actually be a deterrent for working holiday makers coming to Australia therefore contradicting the intention of the tax”, suggests Mayor Adem.
The forum also focussed on the working holiday maker visa review and the opportunity to provide submissions. The collective group now aim to lobby the federal government for the review to be undertaken sooner than the planned October date due to it being too close to the start of the harvest season. The group will also be suggesting that superannuation reform in relation to backpackers be considered instead of the tax.
“It is very disappointing that no consultation with key stakeholders was undertaken by the Federal government prior to the backpacker tax announcement”, suggests Mayor Adem. “The Federal government needed to be fully informed of any implications prior to introducing this scheme. As a united group, we now need to educate the government on the repercussions of such a tax, a tax which aims to generate revenue however the reality is that it has the potential to be detrimental to our local industries and the national economy”.
“Our dairy industry is already reeling and dealing with the ramifications of reduced payments from milk processors, a tax that will significantly impact the productivity of our horticultural industry has the potential to create yet another burden for our local economy, a burden that will have significant consequences for our viability and prosperity”, contends Mayor Adem.
The review of 417 and 462 Visa Labour will report by mid-October, with agreed changes to take effect from 1 January 2017.
