Current Affairs

Tax Hike for Australia Working Holidays Visa

Australia, 18th May: Australia Working Holiday Visas will witness tax hike from 1st July next year.

This new ruling will make Australia working holiday visas less attractive for foreign backpackers.

Tax Increase for Australia Working Holiday VisasAustralia working holiday visas to have increased taxes—Australia working holiday visas are going to become less attractive due to the latest reform to become effective next year. As per the details, Australia will be abolishing its tax-free allowance for Australia working holiday visas.

Moreover, it will be increasing the income tax rate to 32.5 percent from the current 19 percent.

Australia government will be introducing these changes from 1st July, 2016, stated Joe Hockey, Australia’s treasure.

<blockquote> Australia working holiday visas will not enjoy any tax-free allowance. And the income tax rate will go up from 19 percent to 32.5 percent. </blockquote>

Details of the tax hike for Australia backpackers—Backpackers coming to Australia on Australia working holiday visas shall get taxed at 32.5 percent from the very first dollar earned by them. As of now, Australia working holiday visa holders are required to pay 19 cents(in the dollar) on taxable income above the income-tax free threshold of $18,500.

It simply means paying a tax of nearly $12,000 on an earning of up to $37,000 on Australia working holiday visa. The current tax is on the same amount is nearly $3,500.

Increased tax rate for backpackers means $540 m by 2019—As per the estimates, the new rules of increased income tax rate on Australia working holiday visa holders coming to Australia for holidaying and working will generate $540 million in terms of revenue by the year 2019.

Aim of new ruling is to secure the employment scenario of young Aussies. In the last year, Australia issued working holiday visas to around 180,000 foreigners. And this means some of Aussies looking for jobs may get displaced due to backpackers coming to Australia.

Foreign visitors coming to Australia on Australia work visas earn from low-paying and odd jobs in Australia farms, bars etc.

More upcoming changes to Australia Visa rules—Australia is going to allow ten-year passports rather than of five years, for 16 and 17 year-olds. Moreover, priority processing fee will also go up. Eligible candidates shall be given an option to replace their damaged, lost or stolen passport, rather than having to buy a new one.

It may be worth mentioned that Australia has been falling in popularity as a working holiday destination among young Irish.

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