On Tuesday, the 27th of September, the Turnbull government released a media statement reflecting the impending changes to the ever-popular Working Holiday Visa.
The Australian Government recognised that individuals holding a Working Holiday Visa make significant contributions to the Australian tourism industry, which is reported to generate 43.4 billion annually.
Working Holiday Visa holders provide a source of labour in agriculture, horticulture, tourism and hospitality.
With input from stakeholders, the Government felt that Working Holiday Visa holders should pay a fair tax on what they earn.
The Turnbull Government agreed to be more committed to reviewing the tax arrangements for Working Holiday Visa holders by the end of 2016.
The Government has approved the following changes:
From the Jan 2017, the tax rate that will be applied to Working Holiday Visa holders will be 19 percent of earnings up to $37,000 instead of the 32.5 percent that was announced in the 2015-2016 budget. Ordinary marginal tax rates will be applied after that.
The Government will reduce the application charges for Working Holiday Visa applicants from $440 to $390 in hopes of giving successful applicants more money to spend while they are in Australia.
It has been reported that Working Holiday Visa applications have slumped since 2012-2013. The main factors that contributed to the decline include exchange rate fluctuations and modified economics conditions in source countries.
The Government has also announced that more flexible arrangements will be introduced to help benefit Working Holiday Visa holders.
A new change will allow an employer with centres in different regions to employ a Working Holiday Visa holder for 12 months; permitting six months in each region.
The Government has partnered with Tourism Australia to administer a $10 million global youth-targeted advertising campaign to promote Australia to potential Working Holiday Visa applicants.
Employers will be obliged to undertake a once-off registration with the ATO (Australian Taxation Office) to retain the integrity of the Working Holiday Scheme and to prevent the exploitation of successful applicants. Employers who fail to register with the ATO will be forced to withhold tax at 32.5 percent.
With this registration process, the Government is hoping to gather more reliable, valuable data about Working Holiday visa makers.
Working Holiday Visa holders will be able to view the list of registered employers as a document on the ABN Lookup website.
With these amendments in place, the Australian Government hopes to not only ensure that Working Holiday Visa holders pay a fair tax on what they earn but also to make Australia an attractive destination for backpackers.
The Australian government is being strict with their budget to ensure fairness across the new amendments.
When Working Holiday Visa holders leave the country, the tax on their superannuation payments will increase to 95 percent.
The reason for this increase is to align with the concept of superannuation. The superannuation fund was designed to help Australians when they retire, not to act as additional income support for Working Holiday Visa holders when they leave the country.
The Passenger Movement Charge will also incur a one-off increase of $5.00 starting from the 1st of July 2017.
The Australian government is looking to swiftly introduce legislation to enforce these changes to provide employers and Working Holiday Visa holders with more confidence.
Book a consultation with one of our registered migration consultants if you have any questions or concerns about the Working Holiday Visa.