The Australian Tax Office has moved to clarify backpacker tax arrangements, confirming that controversial tax increases would not begin from July 1st.
Recently, the ATO had been directing concerned farmers to its website, which stated that a 32.5 per cent tax rate for backpackers was due to take effect from July 1st. That contradicted an earlier announcement by the Coalition government, that any backpacker tax changes would be delayed until January pending a review.
The confusion arose after the Queensland Farmers Federation (QFF) sought clarification from the ATO, on behalf of its members who said they had been told the tax increases would apply from the new financial year.
The ATO replied by directing farmers to its website, which stated that from July 1 working holiday visa holders would be treated as non-residents for tax purposes, will not be able to access the tax-free threshold and will be taxed at 32.5 per cent from their first dollar earnt. The website was subsequently updated to remove references to a July 1 start date.
The ATO said that “whether there are any changes to the tax laws for backpackers, and the date from which any changes would commence, is a matter for the government”.
It did not explain why its advice wasn’t updated earlier.