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Senate Committee backs Coalition's 19% tax rate



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T h e H o n . B a r n a b y J o y c e M P

D e p u t y P r i m e M i n i s t e r

M i n i s t e r f o r A g r i c u l t u r e a n d W a t e r R e s o u r c e s

M E D I A R E L E A S E

Media contact: Megan Dempsey 0491 222 306

Senate Committee backs Coalition’s 19% tax rate

• Senate Inquiry recommends the Coalition Government’s Working Holiday Maker reform package be passed • The four Bills ensure an internationally competitive tax rate for backpackers, that does not disadvantage Australian workers • Speedy passage of the bill essential to providing certainty for farmers and industry

The report from the Senate Inquiry into the Working Holiday Maker Reform package recommends the Coalition Government’s legislation to provide a 19 per cent tax rate be passed to maintain Australia’s attractiveness to backpackers, and secure supplementary harvest labour for Australian farmers.

Deputy Prime Minister and Minister for Agriculture and Water Resources, Barnaby Joyce, said the Senate Committee’s verdict on the Coalition’s proposed reforms to working holiday maker tax rates is crystal clear.

“The Committee recommends the bills be passed as quickly as possible,” Minister Joyce said.

“The Senate Committee is confident the reform package will ensure that working holiday makers are paying a fair share of tax and not disadvantaging Australian workers, while retaining Australia as a destination of choice for those workers.”

Minister Joyce said backpackers would have more money in their pockets when they work in Australia - compared to New Zealand, Canada, or the UK - under a 19% tax.

“Our tax position is fully funded and internationally competitive due to our high wage rates, which was also highlighted by NSW Farmers and Cotton Australia in their submissions to the report,” Minister Joyce said.

In its submission the National Farmers’ Federation reported it had supported the 19 per cent from the beginning and CEO Tony Mahar echoed the sentiments of most when he said that “the uncertainty is killing the industry and causing huge concern as we come into the summer fruit season”.1

1 Mr Tony Mahar, Chief Executive Officer, National Farmers’ Federation, Senate Economics Legislation Committee report on Working Holiday Maker Reform package, p19

10 November 2016

Media release from Barnaby Joyce - Minister for Agriculture and Water Resources Page 2

Media contact: Megan Dempsey 0491 222 306

Meanwhile, Labor, One Nation and Senator Jacquie Lambie are proposing a 10.5 per cent tax that puts a $500 million hole in the budget with no savings identified.

“Not only does Labor’s blatantly political game playing add more delays that could see fruit left unpicked on the trees over Christmas; and not only does Labor’s proposal leave a $500 million hole in the federal budget, but Labor plans to slap a higher marginal tax rate on Aussie workers than it does on foreign backpackers,” Minister Joyce said.

Minister Joyce said the Senate Inquiry also made it clear that stalling the passage of legislation would mean backpackers would be liable for the 32.5% tax rate from 1 January 2017.

“That is because the 32.5% tax rate applying to non-residents had been the law since it was increased from 29% by the previous Labor Government as part of Labor’s 2012-13 Budget, Minister Joyce said.

“There can be no more debate or misinformation about what happens if this reform package is not passed. It was Labor who referred the reform package to the Senate Economics Committee for review, the committee has reported and it is now up to Labor to stop picking at the scab and playing games with peoples’ livelihoods.

“Every single day of delay in passing the government’s bills costs Australian farmers and that is why Labor needs to support our fair and balanced 19 per cent industry-backed tax rate, giving farmers certainty before Christmas.”

FAST FACTS • The 32.5 per cent tax rate applying to non-residents is not new. It has been in law since it was increased from 29 per cent by the previous Labor Government as part of Wayne Swan’s 2012-13 Budget. • The tax-free threshold was removed from the non-resident tax tables in 1982. Many

backpackers have been incorrectly claiming to be residents for tax purposes, thereby accessing the tax free threshold available for Australian citizens. Because the tax-free threshold was increased under Labor, many backpackers have not been paying fair tax on income earned while working in this country. • Administrative Appeals Tribunal decisions in March 2015 mean that 32.5% is the tax

rate that applies to most backpackers if we do nothing. The ATO issued a statement on 2 November saying it will consider most backpackers to be non-residents for tax— owing to the 2015 Tribunal decisions—unless we take action to change the legislation.