Working holiday-makers in Australia face huge tax hike on earnings

Backpackers who undertake a working holiday around Australia are facing a more punitive tax rate on what they earn from next year.

A road through the Australian Outback. Image by Joan Campderrós-i-Canas / CC BY-SA 2.0

The new budget from the federal government has targeted overseas visitors in a bid to raise extra tax, but risk making the ‘rite of passage’ for many something no longer worth doing.

The Melbourne Herald Sun reports that tourists who work will now be taxed at 32.5 cents from the first dollar they earn. Currently those on working holiday visas pay 19 cents in the dollar, but only after they earn above the tax-free $18,500 threshold.

The newspaper says that if someone earning up to $37,000 would in future have to pay $12,000 in tax instead of the present level of $3,500.

The new levels of tax come into effect in 14 months times and the Australian government envisages that it will yield over half a billion dollars to revenue coffers within three years.

Over 180,000 visitors were granted working holiday visas in Australia in the last financial year and the government action is in part aimed to raising more money, but also because there have been complaints that locals are losing out on this employment.

However, these jobs are mostly in the lower paid areas of bar, farm and not for profit work.

The Australian government has also launched a money-making initiative to take advantage of the burgeoning tourist industry by increasing passport fees and other charges.