There are changes to the working holiday program from the 1st of January 2017. Some of the changes will assist various industries that need temporary or seasonal workers like the farming and hospitality sector. Other changes may help increase the number of working holiday visa holders arriving in Australia. It is beneficial to the Australian economy in that the money earned by backpackers generally stays within the Australian economy.
The Key changes explained below.
The age limit for applicants wishing to obtain a working holiday visa is to be increased to 35, this is helpful in that many people who have spent their early lives obtaining qualification and working through their apprenticeships may now be able to come and work in Australia. Working holiday workers are an important source of future permanent residents. Being in Australia makes it easy for employers to meet and assess the skills of potential job applicants, many if these working holiday visa holders end up making Australia their home.
At present a working holiday visa holder can only work for one employer for 6 months, this has been changed and now employers with premises in different regions can provide a job in a different location. This makes it possible to work for the same employer for 12 month.
The working holiday application fee has been reduced to $390 a saving of $50.
A 10million advertising campaign will be undertaken to encourage more working holiday makers to visit Australia.
The Tax on working holiday visa holder’s income will be 19% on incomes of less than $37000. At present there is a tax free threshold of up to $18200 per year. (Depending on whether or not a working holiday maker is in Australia for a full tax year.)
So how will the working holiday visa holder be impacted?
Assuming the working holiday visa holder was in Australia for the entire tax year:
In the new system the tax paid on $37000 would have been $7030
In the old System the tax on the same amount $37000 will be 3127.00. Remember that under the old system the working holiday visa holder would receive the benefit of the tax free threshold of $18200.
The net result, under the new system the working holiday visa holder will be worst off by 3903.
Normal Australian tax will apply on incomes over $37000
Employers will have to register with the Australian Tax Authority (ATO). This register of employers will be available to the public.
Tax on working holiday makers’ superannuation will be increased to 95% from 1 July 2017 when they leave Australia. Working holiday makers will effectively forfeit their superannuation when they leave Australia at the end of their working holiday.
Our conclusion.
On balance many of these changes will help increase the number of working holiday visa holder to come and work in Australia. The increase in the age to 35 will help bring in people with more skills. The ability to work for the same employer for 12 months will improve the employer’s productivity. The small drop in the cost of the visa is a marginal improvement and will not really make a definable change to the working holiday program. The small change in the tax is not such an important factor considering all the other positive changes.
