Tax on backpacker super dropped from 95% to 65% in deal with Greens

The Government and the Greens have agreed on setting the ‘backpacker tax’ at 15%, with a decrease from 95% to 65% in the tax on the Departing Australia Superannuation Payments (DASP) of backpackers.

Only last week the Parliament passed a Bill which increased the tax rate on DASPs for backpackers to 95% from 1 July 2017. Currently most backpackers pay 38% tax on these payments.

The Greens have now negotiated a 65% tax rate on DASPs for backpackers, as part of a deal over the so called ‘backpacker tax’.

“The compromise we’ve struck with the Government will see backpackers taxed at a nominal rate of 15 percent, but at the same time their super payments will drop from 95 to 65 percent. This is an outcome that will place this new package at an equivalent rate to the 13 percent favoured by Labor and some crossbenchers,” said Senator Di Natale, Australian Greens Leader.

“The agreement on super is an especially good outcome for rural economies. This is money that will be spent in rural communities, providing a much needed boost for rural economies,” he said.

The change to tax on DASPs for backpackers is estimated to cost the Budget $55 million over the forward estimates. The Treasurer says this will be “fully offset in MYEFO”, which is due to be released later in December.

According to the Treasurer the backpacker tax changes, in total, will contribute a net $560 million to the Budget, “almost 74 per cent of the revenue the original Budget measure would have raised over the current forward estimates”.

The changes to the tax rates applying to DASPs for backpackers is, at the time of publication, making it’s way through the Parliament contained in the Superannuation (Departing Australia Superannuation Payments Tax) Amendment Bill (No. 2) 2016. The Bill appears likely to pass both Houses, given the deal, before Parliament rises for the year.

Update: the Parliament has passed the Superannuation (Departing Australia Superannuation Payments Tax) Amendment Bill (No. 2) 2016 and the Income Tax Rates Amendment (Working Holiday Maker Reform) Bill 2016 (No. 2).

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2 Replies to “Tax on backpacker super dropped from 95% to 65% in deal with Greens”

  1. I might be a bit thick…but a resident worker can earn $18k and pay no tax…backpacker pays 10.5%, …the resident pays no tax on super in most circumstances…backpackers usually don’t claim their super when they go home…so our government takes it as unclaimed super after 2 years (?) now…if the backpacker does claim it, then our government takes 65%.
    Picking veges/fruit is very unrewarding, at least in the far west Brisbane area area, the rates of pay are pathetic and the labour companies rip them off at every turn…

    I know the backpackers don’t have a voice, and I know we are broke, but I wonder where Australia’s sense of fair play has gone…

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