The federal government will change the rules for working holidays from July 1, 2016, meaning tourists will be taxed at 32.5 per cent from the very first dollar they earn, delivering an estimated $540 million to budget bottom line over four years.
Currently, foreigners on working holidays enjoy a tax-free threshold on their first $20,000 in income, and a 19 per cent tax rate on earnings up to $37,000.
The move is set to have a massive impact on the agricultural sector, which relies heavily on casual workers, most of them backpackers, to carry out seasonal work such as fruit picking.
The drastic increase in income tax for overseas, casual workers will make it increasingly difficult for employers to find flexible, temporary staff.
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