Backpacker Tax: What you need to know

Okay so backpacker tax isn’t the most exciting thing to read about on the internet, especially when there are so many other ways to spend your time…like planning your next adventure and watching compilation videos of cute kittens, but if you’re a backpacker planning a gap year in Australia there have been some recent and important changes that you should be aware of. These changes will affect how much you’ll be taxed on your earnings and most importantly, how much money you’ll have to play with when you get here!

You may or may not have heard about the recent proposals by the Aussie government to up the backpacker tax to 32.5% on every dollar by the end of the year. After months of government reviews, petitions and concerns from those working in the tourism industry and the agricultural sector, Scott Morrison, Australian treasurer has announced some important updates. Here’s what went down..

• From January 2017, Working holiday visas will now be available to those aged 18-35 which gives people over 30 another 5 years to take advantage of the working holiday visa program and start living the Aussie dream!

• Working holiday visa applications will also be $50 cheaper.

• Backpackers on working holiday visas will be taxed at a rate of 19% on their earnings up to $37,000/tax year (as opposed to the 32.5% tax rate that was proposed earlier in the year).

• As compensation for the reduced working holiday visa fee and lower than proposed tax rate, the Aussie tax office will be implementing a $5 exit fee along with a 95% tax rate on Superannuation.

The changes have been put in place to encourage backpackers to travel to Australia as they are an ‘important source of labour for the agricultural sector’ and Tourism Australia have been given $10 million to promote Working holiday visas in Australia.

Luckily, with an above average minimum wage of $17.70, Australia is still a great choice and affordable destination for backpackers planning their gap years!

What do you think about the changes to backpacker tax? Tell us your thoughts in the comments below! Planning your gap year? Check out UltimateOz, our 7 day gap year arrival package. Download your FREE brochure and get in touch if you have any questions!