Backpacker tax expected to hurt agri business says IBISWorld research

Posted by AFN Staff Writers on 22nd February 2017

IBISWorld says its research indicates the backpacker tax will negatively affect a number of Australian industries, including agribusiness.

As of 1 January 2017, those on working holiday visas have to pay a tax of 15 cents on every dollar up until they earn AUD $37, 000 within a financial year. Once they begin earning over AUD $37, 000 the forging resident tax rates apply. Those on working holiday visas will also have their superannuation funds taxed at 65 per cent from 1 July 2017, up from 28 per cent.

IBISWorld Senior Industry Analyst, Nathan Cloutman, said in January 2013 a price rise for working holiday visas discouraged many overseas travellers from working in Australia.

“A tax on all income earned on working holiday visas will likely discourage backpackers looking to work during their stay in Australia, causing average backpacker visitor nights to decline over the next five years,’ Cloutman said.

Since the 2013 visa price rise, backpacker numbers have increased but IBISWorld says the average length of stay has decreased.

“IBISWorld also anticipates avoidance schemes and cash jobs will become more prevalent under the new rules,” Cloutman said.

Tax likely to affect several ag industries over the next five years

“The bill is likely to affect several agricultural industries over the next five years,” Cloutman said.

“Many fruit and vegetable growing farms rely on cheap labour sourced from overseas backpackers, particularly as many backpackers work on agricultural farms to stay in Australia for an additional year,” he stated.

IBISWorld said that without the backpackers farmers could reduction production which could lead to profitability declines.

“Many farms will likely find it hard to fill job vacancies without a cheap and casual visiting workforce,” IBISWorld concluded.


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