Tax Free Threshold Axed For Working Holiday Makers

The introduction of a revamped working holiday visa program will send shock waves through all hopeful travellers who have plans to visit Australia.

The Federal Government are bringing into effect a 32.5% income tax on every dollar earned by any working holiday makers, tearing away the tax free threshold that once was. The move is in an attempt to raise further revenue which, has been forecast to be in the region of $540 million over a four year period. Annually, the WHM income tax will generate the government $135 million.

“We don’t want to increase taxes on Australians, but we do want everyone to pay their fair share along the way”. These words were spoken from Joe Hockey, the Federal Treasurer and it will knock the enthusiasm levels down of any future travellers to the country.

However, these figures have people asking questions…

With the number of WHM applications dropping over the past 12 months, the figures outlined by Julian Ledger, CEO of THA Ltd are flawed, as they depend on a consistent flow of WHM into Australia. With the increase in Visa fees recently, it is put forward as a reason why fewer applications are being made and with that said, there has been an increase to the price of the WHM visa.

The government have upped the fee from $420 to $440 and now it is set to tax the holiday makers, starting in July 2016.

Has the changes to the Working Holiday Visa made you rethink your travels to Australia?

Peter Shelley, the ATEC’s Managing Director voiced his concerns with the incoming WHM changes “Also of concern is the impact of changes to working holiday maker visa fees and the removal of the tax-free threshold that will affect around 200,000 youth travellers who visit Australia each year and spend an average of $13,000 during their stay.”

For the travellers themselves, they will have a number of questions to ask and it may lead to them looking to other destinations for their travel experiences. Wendy Aylward, Managing Director of AIFS pointed out the attention this announcement is getting on Facebook and she warned, “I expect to see comments throughout the day. Word will travel and those who factor tax returns into their travel planning may choose to head elsewhere.”

The program is a way for both Australia and global travellers to benefit, as on one hand the WHV program ensures that the travellers undertake important rural jobs, those that aren’t appealing to young Australians. With already fewer traveller applying for visas to Australia, will the government experience an even greater dip in figures once the income tax change is introduced next year?