The introduction of the ‘backpacker tax’, and the substantial increase in the tax rate on Departing Australia Superannuation Payments (DASPs) was “poorly handled” and needs review, says the Chartered Accountants of Australia and New Zealand.
A deal between the Government and the Greens set the ‘backpacker tax’ at 15% and increased the tax on DASPs to 65%, instead of the planned 95% DASP tax rate.
CAANZ says the implementation of the changes may be lacking and it could have reduced the number of working backpackers.
“We hear from some Chartered Accountants in rural and regional Australia that the new arrangements have not been embraced uniformly. The ATO is no doubt following up on whether the implementation has gone as well as it hoped,” said CAANZ in its pre 2018/19 Budget submission.
“In terms of second round effects, ABC News has reported the ‘Backpacker Tax’ is a contributing factor to a shortage of fruit picking labour in southern States in Australia.”
“Data for the year to 30 June 2017 shows a 1% reduction in first Working Holiday visas were granted, compared to 2015-16, with the largest decline being British backpackers. It is unclear whether this had anything to do with the new tax arrangements, or is part of an overall declining trend in recent years.”
CAANZ recommends the Government consult with the ATO, other regulators and the National Farmers’ Federation on a post-implementation review of the backpacker tax.
“The review should consider any second round effects on the main industries which rely on working holiday makers.”
During the debate around the backpacker tax the National Farmers Federation called for superannuation that would otherwise go to backpackers to be redirected into regional employment programs.