Tax Returns for Backpackers – What you need to know

This could be the last financial year that backpackers will get a tax refund.

Tax changes being proposed for 417 working holiday visas holders have been deferred for another six month. There are major concerns in the tourism, hospitality and the agricultural industry that less young people often referred to as backpackers will come to Australia and work and travel around Australia as a result.

Working Holiday Changes 2024

The industries that will suffer are those that rely on these same working holiday visa holders to spend their money whilst touring through Australia, this means temporary accommodation providers like backpacker hostel, and other budget accommodation place. The multiplier effect will also cause a ripple effect in the economy by reducing visitors to popular visitor destination like national parks, caves, museums and the like. There is also an impact on local cafes and smaller regional supermarket.

There is also concern that working holiday visa holders are a significant source of 457 visa holders, these are people who stay on in Australia on a 4 year temporary work visa sponsored by an employer, many back packers also convert to skilled visas, and this includes health industry professionals nursing staff, carpenters, electricians and plumbers amongst many others.

The proposal would in effect take away the basic tax exempt earning of 18200 to nil so all the working holiday visa holders income would become taxable, these amount of earning are not taxed at present. Backpackers and working holiday makers are amongst one of the least paid group and would be hurt badly and so would many other industries like accommodation and other supporting business who need the backpacker dollar to exist.

State budgets would also suffer as more subsidies have to be made to government subsidised visitor attractions.

Farmers would suffer more than most as we would see a reduction in seasonal workers, agricultural yield would suffer and we will see many farmers get into even more financial difficulties. Farmers already have their hand open for help from the government, this call for financial help from the agricultural sector will only grow if this tax change is implemented.

The hospitality industry would suffer, particularly the businesses that need more labour in the high season, pubs, hotels, caravan parks, theme parks and the like would all suffer, and the impact on a recovering tourism industry would be devastating.

So why bring in such a negative measure at a time when the labour market is recovering, agriculture needs help as does tourism.

There is hope however, the Turnbull government has delayed the decision to implement the changes to what is dubbed “the backpacker tax”, let us hope this badly thought piece of legislation is withdrawn as a proposal in the near future.

The countries that will be delighted to see this legislation take hold would be New Zealand, South Africa and Canada who would see an increase in working holiday traffic and so enjoy the benefits.

Legislators need to consider that most of the money earned by working holiday visa holders stays in Australia and help grow the economy.