With the Australian Election this Saturday working holiday makers are wondering where they stand re the “Backpacker Tax”.
The Current Situation
The backpacker tax will be “deferred” until January 1 2016.
( Meaning you don’t have to pay the 32.5% backpacker tax and the first $18,000 you earn’t during the 15/16 financial year will be under the tax free threshold if you are considered a resident for tax purposes.)
We Believe the deferral will be for the whole financial year ( July 1 2016-June 30 2017) as it will be too hard to police pre & post Dec 31st income if a tax is approved.
If you don’t remember the announcement, here it is.
— ABC News 24 (@ABCNews24) May 16, 2016
The review will be lead by Barnaby Joyce, it will investigate the “Supply and Taxation” of Working Holiday Makers. Supply is an interesting topic as we could see the age bracket open ( 18 – 35? ) with a middle ground on tax.
What Happens If…
The Coalition Win
If the Coalition Win it will be business as usual, the review will go ahead and we should know where we stand by mid/late October.
The result could be, backpacker tax is scraped, a lower rate is imposed ( 18%) or they go ahead with the 32.5%, or something involving superannuation.
Their is a large rift in the Coalition when it comes to the backpacker tax, if you are not familiar with Australian politics the coalition is made up of the Liberal and Nationals Party. The Nationals are meant to represent the views and interest of country Australia.
Labor has been extremely hesitant about giving a position about the backpacker tax. They will not commit to scrapping it but slander the Liberal party for not doing so, politics 101. Labor has committed to a full review and consultation with industry stakeholders after the eleciton.
The results could be, tax is scraped, a lower rate is imposed or they go ahead with the 32.5%. ( much lower probability of going ahead with the 32.5% if Labor are in)
Where do you stand now – Current Tax Year
As of today ( July 1st 2016) you can now lodge your tax refund, utilising the tax free threshold!
This means if you are considered a resident for tax purposes you will receive the tax free threshold ( not required to pay tax on the first $18,000 you earn) So every dollar of tax you paid this year, you will get as a refund if you earn’t under $18,000.
The average backpacker tax refund is $2,600.
To determine how much you are due check out our tax refund calculator below:
If you have any questions please don’t hesitate to contact us or comment below