Income Tax Rates Amendment (Working Holiday Maker Reform) Bill 2016 (Cth)

Wednesday 19 October 2016 @ 1.12 p.m. | Immigration | Taxation

The Income Tax Rates Amendment (Working Holiday Maker Reform) Bill 2016 has been introduced into Parliament as part of the working holiday maker reform package. The Bill, along with its accompanying bills, reforms other arrangements for individuals holding a subclass 417 (working holiday) visa. This follows the Government’s commitment to sustaining Australia as an attractive and safe destination for working holiday-makers.

Background to the Bill

According to Australian Treasurer Scott Morrison:

“The working holiday-maker reform package will ensure working holiday-makers pay their fair share of tax, establish an employer register and a compliance regime to address concerns about the exploitation of working holiday-makers.”

As Mr Morrison explained in his second reading speech, the taxation laws concerning working holiday makers under the previous government effectively meant that those who were residents for tax purposes and earning below the $18, 200 tax-free threshold were effectively taking  “ advantage of Australian services and infrastructure” without “the obligation to pay Australian income tax.”

Bill Package

Essentially, the Bill and its accompanying bills, attempt to ensure the integrity of the tax base in relation to working holiday-makers but also address the concerns raised by stakeholders. Mr Morrison explained:

“This bill will set the tax rate to apply to working holiday makers at 19 per cent from their first dollar of income up to $37,000, rather than the 32.5 per cent that applies to the majority of backpackers under non-resident tax rates and that would apply under the announced 2015-16 budget measure. Ordinary marginal tax rates apply for income above $37,000. The new tax rate will apply from 1 January 2017.”

Other bills in the package will make arrangements that will see the lowering of the costs involved in obtaining a work visa as well as ensure that working holiday-makers are not exploited by employers. The government is also committing an additional $10 million to support the compliance operations of the Fair Work Ombudsman and the Australian Taxation Office to ensure employers are doing the right things by working holiday makers when they are working in Australia.

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Sources:

Income Tax Rates Amendment (Working Holiday Maker Reform) Bill 2016, Bill, Second Reading Speech and Explanatory Memorandum as published on LawOne

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