Backpacker tax ruling an early Christmas present for hospitality: R&CA

02 December, 2016 by
Danielle Bowling

The resolution of the backpacker tax will provide much needed certainty to tourism and hospitality operators heading into the busiest trading period of the year, said Restaurant & Catering Australia (R&CA).

Thanks to a Turnbull government deal with The Greens, from 1 January, 2017, a tax rate of 15 percent will apply to working holiday-makers, down from the 32.5 percent originally proposed in the 2015-16 federal budget. Tax on superannuation payments will also be revised from 95 percent to 65 per cent.

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The government has also agreed to freeze the Passenger Movement Charge for the next five years following a $5 increase in the charge to $60. In addition, a $10 million youth campaign will be designed to promote Australia as a destination to holiday and work.

R&CA CEO and Chair of the ACCI Tourism Council John Hart has welcomed the long-awaited decision, saying the decision brings certainty to many businesses reliant on travellers to supplement their workforce.

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“It hasn’t been an easy process arriving at this decision. Operators need certainty of the tax arrangements for these workers. Any further delays would have had huge administrative implications for the sector come 1 January, 2017.

“We cannot underestimate the importance of transient workers to our industry, particularly in regional Australia. For every 100 working holiday-makers to Australia, a further 6.3 full-time jobs are created elsewhere in the economy. Tax arrangements for these workers need to be fair but also ensure Australia is still an attractive destination to holiday and work,” Hart said.

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Hart said the industry’s attention must now be focused on promoting Australia as a travel destination.    

“The industry remains concerned over the potential damage the delayed decision has caused the sector. We must reengage young travellers and reiterate our competitive rates of pay and amazing visitor experiences on offer.”

The relief from the backpacker tax decision is somewhat dampened by recent announcements that the government plans to crack down on 457 visa holders.

Last month the Turnbull government announced its plans to reduce the amount of time foreign workers on 457 visas can stay in Australia following their employment from 90 days to 60 days.

Shortly after, Labor proposed a number of changes aimed at giving Australians priority for local jobs. These include a requirement that employers prove they’ve contributed to local employment when applying to sponsor workers on 457 visas.

These changes are likely to hurt hospitality operators, as – according to the Department of Immigration and Border Protection – more visas are granted to chefs and cooks than any other profession.