Tax hike set to take shine off working holidays Down Under

THE Federal Budget has taken some shine off the working holiday, with much higher tax rates for backpackers trying to earn cash here.

WORKING holidays in Australia are set to become a lot less attractive, with plans to jack up the tax rate for backpackers who want to work their way around the country.

Under changes flagged in the Federal Budget, overseas visitors who embark on a working holiday down under will be taxed at 32.5 cents from the first dollar they earn.

At the moment, those on working holiday visas pay 19 cents in the dollar on taxable income above the tax-free threshold (of $18,500).

It means someone earning up to $37,000 on a working holiday will pay around $12,000 in tax instead of $3500.

Saddling up ... Tourists on a camel tours in the red centre. Pic: Tourism NT

The measure will take effect from July 2016, and is expected to generate $540 million in revenue by 2019.

In the last financial year, more than 180,000 people were granted working holiday visas in Australia raising concerns the practice could be costing young Aussies employment.

A Senate Inquiry is currently holding hearings around the country into the impact of temporary work visa programs on the labour market.

Typically, overseas visitors on work visas earn money from relatively low paid jobs in bars, on farms and with not for profit groups.

Booming market ... Passengers at the Tiger Terminal at Melbourne Airport. Picture: Ian Currie

Another initiative set to make money out of Australia’s booming tourism industry is an overhaul of passport fees and charges.

The changes include allowing 16 and 17-year-olds to be issued with ten-year passports instead of five years, increasing the priority processing fee and providing an option for eligible people to replace a lost, stolen or damaged passport, instead of having to purchase a new passport.

The budget also flags a new pilot program for “Science Tourism” in an initiative expected to benefit places like Parkes, Longreach, Kangaroo Island and Cairns.

The program will “seek to improve science engagement that happens in many tourist destinations, and then promote these destinations to the many Australians travelling our country”.

“Learning and discovery can be key motivators for families who are travelling with both young and older children,” read the outline provided in the Budget papers.

No funding was allocationed for the program which is expected to be administered by Tourism Australia.

Originally published as Tax hike set to take shine off working holidays Down Under