The Australian Federal government has planned to introduce an adjustment to the tax free threshold for non-resident workers. With the commencement originally announced for July 2016, debates between the country’s major political parties has delayed the implementation to January 2017.
Higher tax rate on all income
The proposed tax will apply to those working in Australia on 462 and 417 visas. Travellers with these permits will have to pay 32.5% tax on every AUD earned. Previously, income of up to AUD18,000 (£9,500) was untaxed.
Under the new tax rules, a non-resident in Australia earning AUD40,000 per year could have to pay up to AUD13,000 in tax, leaving them with a net salary of AUD27,000.
This announcement, made as part of the 2015 National Budget, means that working (non-resident) holidaymakers will pay much higher tax than working (resident) Australians.
Superannuation funds affected
This new regulation also impacts the tax temporary residents will need to pay when they exit Australia. When withdrawing their entire pension – known as superannuation – working non-resident Australians will be taxed at between 38 and 47%.
The new tax has been opposed by the farming and tourism industries. They have raised concerns about the impact it may have on an already depleted working holidaymaker workforce.
The change is expected to impact any businesses and industries that are reliant on seasonal workers.
Looking beyond the country’s borders, there are also fears that this will damage Australia’s international competitiveness in attracting young travellers. Many believe that the change is likely to cause an increase in the number of unregulated cash payments to seasonal workers.
Who qualifies for an Australian Working Holiday Visa (417)?
To qualify for this popular visa, you need to be aged between 18 and 30 and a national of one of the following countries:
- Republic of Cyprus
- Hong Kong Special Administrative Region of the People’s Republic of China (including British National Overseas passport holders)
- Republic of Ireland
- Republic of Korea
- United Kingdom