spouse of scouse

Australia delays 'backpacker tax' hike - BBC News

The Australian government will delay its plan to introduce a so-called "backpacker tax" after a backlash from farmers and the tourism industry.

Tourists on working holiday visas were set to be excluded from the country's tax-free threshold from 1 July.

Under the plan they would have been taxed at 32.5c for every dollar they earned in Australia.

But the tourism and farming sectors, which rely on temporary workers, lobbied hard against the change.

teza

Unfortunately as most WHVs are classed as residents for tax purposes, they've abused the system for years, I'd be surprised if they bring it under control

spouse of scouse

Sorry Teza, I don't get what you're saying?

Cubiscus

Eh? Aren't most classed as non-residents?

Bermudashorts

No historically most will have classified themselves as residents for favourable tax rates.

spouse of scouse

Young people on a 417 Work/Holiday visa are classed as resident for tax purposes. Teza, I don't understand your comments about 417 visa holders abusing the system. By claiming the tax-free threshold, they're complying with Australian Taxation legislation

Changed rules for working holiday makers – Parliament of Australia
Budget Review 2015–16 Index

Les Nielson

In the 2015–16 Budget the Government proposes to change the tax status of temporary working holiday makers from that of resident, to that of non-resident, from 1 July 2016.[1]

Background

Australia’s working holiday program

Most individuals who will be affected by the proposed change will be participants in the ‘Working Holiday Maker Program’. This program allows young adults (aged 18 to 30) from eligible partner countries to work in Australia while having an extended holiday. Work in Australia must not be the main purpose of the visa holder’s visit.[2] This is a cultural exchange programme which enables young travellers to have an extended holiday and earn money through short-term employment.[3]

Qualifications for being classed as a working holiday resident tax payer

Currently, to work legally as a working holiday maker an individual has to obtain an Australian Tax File Number (TFN). These numbers are available to non-residents who have the required working visas. Examples of common valid working visa types are:
•Working holiday makers (subclass 417)
• Entertainment (subclass 420)
•Sport (subclass 421) and
• Work and holiday makers (subclass 462).[4]

Bermudashorts

Most WHV would not technically meet the definition of being resident for tax purposes. There is a lot more to it than number of days in the country, it is to a great extent to do with intentions. And a WHV holder often cannot possibly have the intention to stay because they would not be able to.

I expect Teza is referring to the fact that most will have claimed to be resident although strictly speaking they are not.

spouse of scouse

Ta for the info, it's not a subject I know heaps about. Sounds like a bit of a loophole, then? In that case I can understand the govt. wanting to close it down.

One thing I do know though, if I was a young person on a 417 and was told that there was provision in the tax legislation for me to claim the tax-free threshold, I bloody well would and I wouldn't take kindly to someone telling me I was abusing the system. (don't yell at me, I'm sick)

Bermudashorts

Well an accountant in the traditional sense is always looking for reasons to avoid tax, but I have more of a corporate background and contrary to popular opinion most do not want to dodge tax as it is bad PR. Notable exceptions being Google, Amazon, Starbucks etc.

I think that most WHV holders have been dodging tax and abusing the system for years. Whether non residents should have special tax rates and no personal allowance is not something I particularly have an opinion on either way, but this is the way in Australia and indeed most WHV holders have been abusing this for years by pretending to be resident when they clearly are not.

The knock on impact is would Australian farmers have trouble attracting workers with less favourable tax terms. I don't know, would some unemployed Australians or Australian students would be willing to do some regional work? Pass from me. Obviously would not want Australian farming industry to grind to a halt because of some visa or tax rules.

Cubiscus

There are a lot of strong accusations being thrown around here.

If someone on a WHV stays mainly in a single location, e.g. in Sydney, for the majority of the year (as I have done) they are perfectly entitled to be classified as residents, as of today, and claim the allowance. This isn't 'dodging tax' or 'abusing the system'.