Bills Digest no. 30,
2016–17
PDF version [958KB]
Kai Swoboda
Economics Section
Robert Dossor
Economics Section
4
November 2016
Contents
The Bills Digest at a glance
Purpose of the Bills
Background
Policy development
2015–16 Budget
Relevant reviews
Announcement of proposed package as
reflected in the Bills
Working holiday maker definition and
statistics
Working Holiday (subclass 417)
Work and Holiday (subclass 462)
Characteristics of working holiday
makers
Recent trends in visa applications
and visas granted
Issues with the interpretation of the
existing law
Tax-free threshold changes
Resident or non-resident?
Contribution of working holiday
makers to the economy
Exploitation and compliance
Passenger movement charge
Committee consideration
Senate Economics Committee
Senate Standing Committee for the
Scrutiny of Bills
Policy position of non-government
parties/independents
Australian Labor Party
Other parties and independents
Position of major interest groups
Financial implications
Statement of Compatibility with Human
Rights
Parliamentary Joint Committee on
Human Rights
Income Tax Rates Amendment (Working
Holiday Maker Reform) Bill 2016
Background
Key issues and provisions
Can the status quo be maintained?
Is a 19 per cent tax rate on the
first dollar earned competitive with other backpacker destinations?
Treasury Laws Amendment (Working
Holiday Maker Reform) Bill 2016
Key issues and provisions
Schedule 1—Reduction in visa
application charge
Schedule 2—Registration of employers
of working holiday makers
Schedule 3—Reporting on working
holiday makers
Schedule 4—Protected information
Superannuation (Departing Australia
Superannuation Payments Tax) Amendment Bill 2016
Background
Key issues and provisions
Should working holiday makers be paid
superannuation contributions?
The Passenger Movement Charge
Amendment Bill 2016
Key issues and provisions
Efficiency and effectiveness as a tax
Is the Passenger Movement Charge
regressive?
Date introduced: 12
October 2016
House: House of
Representatives
Portfolio: Treasury
Commencement: Generally
the measures proposed by the Bills will apply from 1 January 2017. The
measures to change certain visa application charges and the passenger
movement charge and to increase the rate of the departing Australia
superannuation payments tax generally apply from 1 July 2017.
Links: The links to the
Bills, their Explanatory Memoranda and second reading speeches can be found
on the homepages for the Income
Tax Rates Amendment (Working Holiday Maker Reform) Bill 2016, the Passenger
Movement Charge Amendment Bill 2016, the Superannuation
(Departing Australia Superannuation Payments Tax) Amendment Bill 2016 and
the Treasury
Laws Amendment (Working Holiday Maker Reform) Bill 2016 or through the Australian
Parliament website.
When Bills have been passed and have received Royal Assent,
they become Acts, which can be found at the Federal Register of Legislation
website.
All hyperlinks in this Bills Digest are correct as
at November 2016.
The Bills Digest at a glance
Purpose of the Bills
- The four Bills in this package implement the Government’s
announcement on 27 September 2016 that working holiday makers (WHMs) would
be taxed at a rate of 19 per cent for income from this work up to $37,000,
with ordinary tax rates and thresholds applying thereafter.
- Other elements of the announced package include increasing the
tax on the Departing Australia Superannuation Payment to 95 per cent,
increasing the passenger movement charge (PMC) by five dollars and reducing the
application charge for WHM visas by $50.
- Elements of the announced package that are not included in the
Bills and need to be implemented through other changes are $10 million funding
for Tourism Australia for a youth targeted advertising campaign, changing visa
conditions so that an employer with premises in different regions is able to
employ a WHM for 12 months, with the WHM working up to six months in each
region, and changing visa conditions so that the eligibility age for a WHM visa
is lifted from age 30 to age 35.
Background
- As part of the 2015–16 Budget, the Government announced a measure
to treat most people who are temporarily in Australia for a working holiday as
non-residents for tax purposes from 1 July 2016. This would have meant that
many WHMs would have been taxed at a rate of 32.5 per cent from the first
dollar earned and was forecast to raise revenue of $540 million over the
forward estimates.
- Following a review process, the Government announced on
27 September 2016 an amended measure that would see tax paid for by WHMs
earning below $37,000 at a rate of 19 per cent. Along with other measures,
including an increase in the Departing Australia Superannuation Payments (DASP)
tax rate and PMC, the announced package of changes are broadly budget neutral.
- The number of WHMs visiting Australia has declined in recent
years, with the number of monthly applications in 2016 at their lowest levels
over the past five years.
Stakeholder concerns
- Following the 2015–16 Budget announcement, many business groups,
particularly those in the agricultural sector, raised concerns that a
32.5 per cent tax rate would be a disincentive for WHMs to come to
Australia, instead going to other countries. Without this source of labour,
business groups argued that the viability of businesses would be at risk.
- While many agricultural groups see the 19 per cent tax rate
as an appropriate compromise, concerns remain, particularly from tourism
groups, about the increase in the PMC.
Key issues
- The interpretation of the existing law by the Administrative
Appeals Tribunal (AAT) provided some clarification of when WHMs qualify as
residents for tax purposes. Retaining existing arrangements may mean that many
WHMs should be taxed as non-residents at a 32.5 per cent tax rate.
- A competitive tax environment may be required to continue to
attract WHMs. The proposed 19 per cent tax rate provides an after-tax
income in Australia that is broadly similar to the regimes that apply in New
Zealand, the United Kingdom and Canada.
- The main argument by the Government for the proposed five dollar
increase in the PMC is to keep the overall cost of the package budget neutral.
An increase in the PMC may have some dampening effect on leisure travel and can
be viewed as regressive, as the share it represents in a ticket’s final price
falls the more the ticket costs.
Purpose of
the Bills
There are four Bills that comprise most elements of the
package of measures to change tax arrangements for WHMs as announced by the
Treasurer on 27 September 2016. The Bills are:
Background
Policy
development
The changes to working holiday tax arrangements were
originally announced as part of the 2015–16 Budget, and then modified following
a consultation process that overlapped the 2016 election. The final
package of changes, which are implemented by the Bills, was announced by the Treasurer
on 27 September 2016.
2015–16
Budget
As part of the 2015–16 Budget, the Abbott Government
announced that it would change the tax residency rules from 1 July 2016 to
treat most people who are temporarily in Australia for a working holiday as
non-residents for tax purposes, regardless of how long they are here.[5]
This change would have meant that these people would have been taxed at 32.5
per cent from their first dollar of income up to $80,000, with no access to the
tax-free threshold.[6]
The overarching budgetary context of this measure, which was
to provide an additional $540 million over the forward estimates, was to
‘pay’ for expenditure in other parts of the Budget.[7]
Following the 2015–16 Budget announcement, concerns were
expressed by some primary producers, tourism operators and state governments
about how the change would impact on labour availability and regional
economies.[8]
Relevant reviews
On 16 March 2016, the Turnbull Government announced a review
of the tax arrangements for WHMs.[9]
Announcing the review, the Deputy Prime Minister Barnaby Joyce noted:
We know about 40,000 backpackers work in agriculture for a
few months each year, the majority in horticulture at seasonal peaks ...
This review is evidence that the Australian Government has
listened to the concerns raised about the impact of the ‘backpacker tax’ on our
global competitiveness and many of our agricultural industries—especially
horticulture.[10]
The consultation process for the review included
consultation with industry groups and employers.[11]
On 17 May 2016, following the delivery of the 2016–17 Budget
on 3 May 2016, the Government announced that it would review the taxation
and supply of working holiday makers.[12]
As part of this announcement, the commencement date for the policy announced at
the 2015–16 Budget was to be delayed from 1 July 2016 to 1 January 2017.[13]
The then Minister for Small Business and Assistant Treasurer, Kelly O’Dwyer,
noted:
It is a whole of government review that’s going to be looking
at making sure that we are internationally competitive, making sure that we
address the issues to do with the taxation and supply of working holiday makers
who are coming to this country and making a fantastic contribution. But also
looking at much broader issues around labour force, particularly in rural and
regional communities and how it affects our farmers, but also our tourism
sector as well, a very critical sector to the Australian economy.
This means, by necessity, that there will be a deferral of
the commencement of the measures that were announced in the Budget, two Budgets
ago. It will mean that that commencement date does not begin on 1 July this
year but will be deferred until the six month period goes past and that there
is the full review and the outcomes of that review are known.[14]
On 15 August 2016, following the July 2016 election, the
Turnbull Government announced the commencement of the review of the taxation and
supply of working holiday makers. In announcing the commencement of the review,
the Deputy Prime Minister noted:
Both farmers and tourism operators have expressed strong
opinions about the supply and taxation of working holiday visa holders.
The proper application of the long-established tax rate of
32.5 per cent for non-residents has been raised as a potential disincentive for
backpackers to take on roles that are not being met by Australian workers.
...
This review will be based on informed understanding not only
of the seasonal and temporary labour challenges facing our industries, but also
the challenges facing the Australian economy in a global labour market.[15]
Part of this review included a call for submissions and
the commissioning of a consultant to ‘lead the public engagement process’.[16]
A copy of the consultant’s report was provided to the Government in September
2016. The report canvassed a range of issues including the importance of 417
and 462 visa holders to the relevant sectors and the potential impact of
proposed changes.[17]
The review received over 1,700 submissions, from organisations representing
the agriculture and tourism sectors, businesses as well as individuals.[18]
Announcement
of proposed package as reflected in the Bills
The final package of measures, which are reflected in the
Bills presented to the Parliament on 12 October 2016, were announced
by the Treasurer on 27 September 2016.[19]
Announcing the package, the Treasurer noted:
The Turnbull Government recognises that working holiday
makers are an important part of Australia’s $43.4 billion tourism industry and
a key source of labour, particularly in the agriculture, horticulture, tourism
and hospitality sectors. We also recognise, as do stakeholders, that working
holiday makers should pay fair tax on their earnings.
At the 2016 election the government committed to review the
tax arrangements for working holiday makers by the end of the year.
...
The Turnbull Government is acting to give certainty to
employers and working holiday makers and will move quickly to introduce
legislation to give effect to these changes. The Government calls on the Opposition
to support this package so the new tax rate can take effect from 1 January
2017.[20]
Elements of the proposed package that are included in
these Bills are:
- apply
a 19 per cent tax rate to the taxable income of WHMs on amounts up to
$37,000, with ordinary tax rates and thresholds applying thereafter
- increase
tax on the Departing Australia Superannuation Payment to 95 per cent
- increase
the passenger movement charge by five dollars
- reduce
the application charge for WHM visas by $50
- create
a register of employers of WHMs, which will be used to enable tax to be
withheld at the lower 19 per cent rate
- provide
for the Commissioner of Taxation to prepare an annual report to the Treasurer,
for presentation in Parliament, which includes statistics and information
derived from the register, and
- allow
the Commissioner to disclose to the Fair Work Ombudsman (FWO) information that
is relevant to ensuring an entity’s compliance with the appropriate employment
arrangements.
Elements of the proposed package that are not included
in the Bills and need to be implemented through other changes are:
- funding
for Tourism Australia to promote Australia as a potential destination for WHMs
through a $10 million global youth targeted advertising campaign
- change
visa conditions so that an employer with premises in different regions is able to
employ a WHM for 12 months, with the WHM working up to six months in each
region
- change
visa conditions so that the eligibility age for a WHM visa is lifted from age
30 to age 35.[21]
Working holiday
maker definition and statistics
Under Australia’s WHM program, young people (aged 18 to 30
years) from certain countries may apply for one of two visas—Working Holiday
(subclass 417) or Work and Holiday (subclass 462).[22]
The visa available to applicants depends on their country of citizenship, but
both visas enable young people to travel in Australia for extended periods and
to support themselves during their stay with short-term employment in any
industry. The program is usually reciprocal, allowing young Australians to
travel and work under similar arrangements in partner countries.[23]
Holders of these two visa categories are used to define
those taxpayers that will be covered by the WHM arrangements proposed by the
Bills. While these WHMs are sometimes described as ‘backpackers’, the use of
the term ‘backpacker’ or other similar terms can have a different meaning or
application (Box 1).
Box 1:
Working holiday maker or backpacker?
The terms
‘working holiday maker’ and ‘backpacker’ are sometimes used interchangeably.
While the
visa subclasses 417 and 462 cover the youth demographic usually associated with
backpackers, backpackers may also be characterised by the types of tourist
activities they pursue, the use of budget accommodation or travel arrangements.
Also, with backpackers able to utilise other types of visa (such as a general
tourist visa or a study visa), the term backpacker can cover groups of overseas
visitors to Australia that, while overlapping with WHM visa holders, can also
include broader groups.[24]
Other
terms used on occasions to describe WHMs include:
- ‘working tourists’—tourists who engage in situations that combine
work with tourism
- ‘travelling workers’ or ‘working holiday tourist’—workers whose
travels are considered a working holiday.[25]
In this Digest,
the term ‘WHM’ will generally be used to refer to those holding visa subclasses
417 and 462. |
Working
Holiday (subclass 417)
The Working Holiday (subclass 417) visa is a temporary visa
for young people who want to holiday and work in Australia for up to 12 months.[26]
Introduced in 1975, it was initially only available for young people from the
United Kingdom (UK), Ireland and Canada. Since its inception, the visa has been
conceived as a cultural program, ‘facilitating the travel of young people to
and from Australia to have a cultural experience, supplemented with a limited
opportunity to work’.[27]
Between 1980 and 2006 the program expanded to include many
other partner countries, such as Japan, South Korea, Hong Kong, Taiwan and
several European nations.[28]
Today, the largest numbers of entrants under this visa
subclass continue to come from the UK, followed by young people from Taiwan,
Germany, South Korea and France. Since 2006, no further Working Holiday
agreements have been entered into with any partner country—only subclass 462
Work and Holiday agreements (that have more restrictive requirements, including
visa caps).
During their 12 month stay, 417 visa holders can work as
much or as little as they choose in full-time, part-time, casual, paid or
voluntary work. However, the work is restricted to a period of six months with
any single employer.[29]
Permission to work longer than six months with a single
employer is possible in certain circumstances, for example if the visa holder
is:
- employed
as an au pair (as of 21 July 2015) or
- employed
in certain industries in Northern Australia, such as aged and disability care,
agriculture, construction, mining and tourism and hospitality (as of 21
November 2015).[30]
There are no caps on the number of Working Holiday visas
issued and the number of grants has increased substantially (from just over
2,690 in 2005–06 to 41,339 in 2014–15) since the option of a second working
holiday visa was introduced in November 2005. This option was initially only available
to those who had been employed in seasonal agricultural work in regional
Australia for three months.
The second Working Holiday visa is valid for a further 12
months. The six month restriction on working with a single employer resets and
applies again in the second year, although it is possible to return to the same
employer from the previous year for another six months. In 2006 the option of a
second visa became available to those working in any regional primary industry,
such as mining. In February 2008 the option extended to people who had worked
for three months in construction industries in regional areas.[31]
Work and
Holiday (subclass 462)
In 2003, the Howard Government began to develop a Work and
Holiday (subclass 462) visa category with additional requirements for young
people from countries that had not already entered into Working Holiday
(subclass 417) visa partner agreements.[32]
Since 2006 all new partner agreements have been negotiated
under this category. Early signatories included Thailand, Chile, Turkey, the
United States of America (USA), Indonesia and Malaysia. More recent additions
to the program include China, Spain and Slovenia.[33]
Other countries are currently negotiating agreements or have signed agreements
that have yet to come into effect—for example the agreement signed in 2011 with
Papua New Guinea (PNG) that is not yet operative.
Under the Work and Holiday visa there are additional
requirements.[34]
For example, applicants from outside the USA must have functional level
English, tertiary qualifications and a letter of support from their home
government (although applicants from China and Israel are exempt from providing
a letter of support). All countries (excluding the USA) have caps on the number
of visas available per year under this program.[35]
In the past only subclass 417 visa holders have been able to
apply for a second visa by working in regional Australia. However, in June 2015
the Australian Government proposed some changes to this restriction as part of
the Government’s initiatives to support Northern Australia. According to the Department
of Immigration and Border Protection (DIBP) website, once the necessary
legislative changes take effect all Work and Holiday (subclass 462) visa
recipients will be eligible to apply for a second visa if they work for three
months (88 days) on their first visa in tourism, hospitality or agriculture in
Northern Australia.[36]
The Government implemented this change through an amendment to the Migration
Regulations registered on 1 November 2016.[37]
The change will come into effect on 19 November 2016.
In addition, as of 2015, both Working Holiday (subclass 417)
and Work and Holiday (subclass 462) visa recipients are able to seek an
extension for up to 12 months (not just six months) working with the same
employer if they:
- work
as au pairs (as of 21 July 2015) or
- work
in Northern Australia (as of 21 November 2015) in aged and disability care;
agriculture, forestry and fishing; construction; mining; or tourism and
hospitality.[38]
Characteristics
of working holiday makers
WHMs come from a range of countries and have different
motivations for coming to Australia. Summarising the profile of a WHM,
University of Adelaide academic Alexander Reilly noted:
We are left with a profile of the contemporary Working
Holiday Maker as a complex global traveller, who combines travel and work in a
variety of ways that are influenced by (among other things) country of origin,
the prevailing economic climate both globally and regionally, family
circumstances, existing connections to Australia and migration intentions. This
contemporary Working Holiday Maker is highly responsive to changes in the
regulation of the Working Holiday visa, factoring these changes into his or her
designs for travel and work.[39]
Recent
trends in visa applications and visas granted
In recent months, the number of WHM visa applications and
WHM visas granted have fallen to their lowest levels in the past five years
(Figure 1).
Figure 1: Trends in working holiday maker visa
applications lodged and visas granted, by month, 2011–12 to 2015–16
| Working holiday maker visa applications lodged |
 |
| Working holiday maker visas granted |
 |
Source: Department of Immigration and Border Protection (DIBP),
Working
holiday maker visa programme report, DIBP, Canberra, 30 June 2016.
Issues with
the interpretation of the existing law
Under existing arrangements, ‘non-residents’ do not have
access to a tax-free threshold, facing a marginal rate of 32.5 cents for
each dollar in income between $0 and $87,000.[40]
Beyond this income level, tax rates are similar to those for residents (Table 1).
Table 1: Resident and non-resident tax rates for 2016–17
| Taxable income |
Residents
marginal rate |
Non-residents
marginal rate |
| $0–$18,200 |
Nil |
32.5
cents |
| $18,201–$37,000 |
19
cents |
| $37,001–$87,000 |
32.5
cents |
| $87,001–$180,000 |
37 cents |
37 cents |
| $180,001 + |
45 cents |
45 cents |
Note: Rates do not include the Medicare levy of two per
cent (not paid by non-residents) or the Temporary Budget Repair Levy (an
additional two per cent paid on taxable incomes over $180,000). The above
rates do not take into account offsets such the low income tax offset.
Source: Section 3 and Schedule 7, Income Tax Rates Act 1986.
Tax-free
threshold changes
The increase in the nominal tax-free threshold to $18,200
was put in place as part of the implementation of the carbon price from
1 July 2015. This change was part of a package of measures to compensate
households for price increases related to the carbon price. When combined with
changes to the low income tax offset (LITO), the effective tax-free threshold
is $20,542.[41]
Prior to this change, the nominal tax-free threshold was $6,000.
In conjunction with the applicable low income tax offset that applied at the
time, the effective tax-free threshold for 2011–12 (the year before the carbon
price was implemented) was $16,000.[42]
Resident or
non-resident?
Determining whether a person is a resident for tax purposes
is complex. In broad terms, an individual is a resident if they meet the
‘ordinary concepts’ test of residence or if any one of three additional tests
set out in the Income Tax Assessment Act 1936 are met.[43]
These three tests cover whether a person is domiciled in Australia (unless the
Commissioner is satisfied that the person's permanent place of abode is outside
Australia), whether the person has been in Australia during more than one-half
of the year of income (the ‘183 day’ test) or whether the person is a
contributing member of a superannuation fund for Commonwealth officers.[44]
The Commission of Taxation set out how these requirements are interpreted in a
1998 tax ruling.[45]
A series of decisions by the Administrative Appeals Tribunal
(AAT) in 2015 provided some clarification of when WHMs qualify as residents,
confirming that applying the ‘183 day’ test alone was not sufficient for
satisfying residence criteria, and that a full assessment of the facts and
circumstances was needed to ascertain residency status.[46]
In the relevant cases, the AAT concluded that as the WHMs had no plans to live
in Australia, they would not be residents during their stay under the 183 days test
as:
- they
had a usual place of abode elsewhere and
- had
no intention of taking up residence in Australia.
This meant that despite spending more than 183 days in
Australia they were not resident for tax purposes.[47]
As noted in the Explanatory Memorandum, these AAT decisions
mean that most transient WHMS do not satisfy the tax residency tests and should
be taxed as non-residents.[48]
The Explanatory Memorandum also noted that WHMs self-assess their residency
status for tax purposes and WHMs that satisfy the tax residency criteria
receive the benefit of the tax-free threshold and the Low Income Tax Offset,
meaning that they do not pay any tax until their income exceeds $20,542.[49]
The 2015–16 Budget announcement, while not explicitly
recognising that many WHMs should not have access to the tax-free threshold and
should be paying 32.5 cents in tax from the first dollar earned, sought in
effect to implement the existing law. The Explanatory Memorandum explicitly
outlines that this was the objective of the 2015–16 announcement, noting:
The [2015–16 Budget announcement] was designed to ensure
greater compliance with the tax laws and align WHMs with other individuals
treated as non-residents for tax purposes.[50]
Contribution
of working holiday makers to the economy
The most recent comprehensive information about WHM visa
holders and the economic contribution of these visa holders is included in a
2009 National Institute of Labour Studies review of the WHM program.[51]
Some of the key findings of this review included:
- WHMs
contribute more to total expenditure than they do to earnings, and thus on
balance make a small contribution to increasing the demand for Australian
workers
- the
supply of WHM labour is of particular value to employers in the regions,
especially agricultural enterprises who employ them to pick produce and to
supply general farm labour
- with
the main exception of regional agricultural work, WHMs do not contribute much
to the reduction of labour or skill shortages. The majority of work done is low
skill and in the cities. In these jobs, they compete with the local low skill
labour force and with local students who seek similar sorts of jobs while they
study.[52]
A 2012 report by the Australian Tourism Export Council
(ATEC) built on the WHM review report to estimate that WHMs spent
$2.4 billion annually while they were in Australia (in 2012 dollars).[53]
Numerous agriculture and tourism industry submissions to the
review of working holiday visas noted the importance of WHMs to businesses,
covering issues such as workforce shortages, productivity and industry
performance (Table 3).
Table 3: Examples of groups citing the benefits of working
holiday makers to industry
| Business/industry group |
Comments |
| Cotton Australia |
‘In the cotton industry and across the agriculture sector,
overseas workers are employed by growers to fill labour gaps, particularly
during peak times when local labour is difficult to access. It is often the
case that these workers are supplementing a pool of full-time permanent staff
during critical periods in the average cotton growers’ season – planting,
irrigating and harvesting’. |
| Australian Mango Industry Association |
‘The Australian mango industry is labour intensive and a
large employer of permanent and casual/seasonal Australian and foreign
workers. It is critical to our industries future that access to competent and
enthusiastic staff is maintained’. |
| Citrus Australia |
‘Labour shortages in regional Australia experienced during
harvest create significant production and financial risk to growers ... The
citrus industry works hard to attract and maintain a reliable workforce of
seasonal labourers, with shortfalls in local engagement filled by foreign
workers, including backpackers’. |
| Falls Creek Chamber of Commerce |
‘Every season our members have problems filling casual
positions and our members heavily rely on International travellers who have
the appropriate working visas. Our season runs from June to October so it’s
difficult to find Australian workers who only want to work only for 4–5
months, this is where the international travellers fill the gap. Of our
membership, 90% use some international travellers. These International
travellers not only fill vacant positions but provide excellent productivity
and work ethic’. |
| Northern Territory Seafood Council |
‘Feedback from industry in general is that the fishing
industry throughout Australia is having difficulty attracting and retaining
local people. There is a growing trend in businesses seeking experienced and
committed crew from overseas, and many businesses also rely heavily on
Working Holiday Makers (or backpackers) to assist them during seasonally
active periods. NT Seafood Council members continue to report sourcing vessel
crew and onshore workers as an ongoing problem.
Unless Industry can source additional labour, in a highly
competitive labour market, there is a real chance that the potential of this
industry will not be reached and, in fact, it may suffer from a protracted
decrease in activity’. |
Source: Cotton Australia, Submission to Department of Agriculture and
Water Resources, Inquiry into working holiday maker visa review, 2 September
2016, p. 2; Australian Mango Industry Association, Submission to Department of Agriculture and
Water Resources, Inquiry into working holiday maker visa review, 2 September
2016, p. 2; Citrus Australia, Submission to Department of Agriculture and
Water Resources, Inquiry into working holiday maker visa review, 2 September
2016, p. 4; Falls Creek Chamber of Commerce, Submission to Department of Agriculture and
Water Resources, Inquiry into working holiday maker visa review, 2016, p. 1;
Northern Territory Seafood Council, Submission to Department of Agriculture and
Water Resources, Inquiry into working holiday maker visa review, 2 September
2016, p. 2.
Exploitation
and compliance
WHMs can be vulnerable to exploitation due to a range of
factors associated with the job and employer characteristics as well as the
individual characteristics of WHMs. These were summarised by Alexander Reilly:
Working Holiday Makers possess many of the characteristics of
vulnerable workers, and they are often found in work that is inherently
precarious. Working Holiday Makers are young workers, mostly working in jobs in
which they have no previous employment experience and in which they do not have
adequate training. Many Working Holiday Makers will be employed in jobs
requiring hard manual labour that they have not previously encountered.
An increasing proportion comes from non-English-speaking
backgrounds, which makes it difficult for them to understand safety
requirements or to ascertain employment protections. They do not have secure
residence status, and as non-citizens, they have limited social and political
power.
The vulnerability of Working Holiday Makers is increased as a
result of the types of work in which they engage. They work in casual,
short-term, labour-intensive employment, in industries highly sensitive to the
cost of labour. The majority of Working Holiday Makers end up in metropolitan
areas where they compete with young Australians for jobs in a tight job market.
In such industries where the supply of labour is greater than its demand,
employers are particularly powerful in the employment relationship. Many other
Working Holiday Makers work in remote, regional locations (and indeed are
encouraged to work in such locations to be eligible for a second Working
Holiday visa) where conditions of work, including the physical climate, the
facilities and the culture, are completely foreign to anything they have
previously experienced.[54]
The exploitation of some WHMs and other temporary migrant
workers—particularly those from non-English speaking countries—has been a topic
of public concern in recent years.[55]
The Senate Standing Committee on Education and Employment’s
2015 inquiry on the impact of Australia’s temporary work visa programs on the
Australian labour market and on the temporary work visa holders, received
evidence of exploitation of migrant workers on WHM visas and abuse of the WHM
visa program by labour hire contractors and sub-contractors. The Committee’s final
report—A
National Disgrace: The Exploitation of Temporary Work Visa Holders,
released in March 2016—noted evidence provided to the Committee of ‘pervasive
exploitation’ of WHM visa holders, particularly for workers from Taiwan, Hong
Kong and South Korea with low English language proficiency.[56]
Passenger
movement charge
The PMC is a tax imposed on a passenger departing from
Australia and is collected by airlines and shipping companies at the time of
the passenger’s purchase of their ticket. The PMC, previously called the
Departure Tax, was introduced in 1978 as a ten dollar tax on a person departing
Australia.[57]
In 1994 the Departure Tax Amendment Act 1994 renamed the Departure Tax
the PMC.[58]
A summary of changes to the level of the PMC prepared by the Tourism Transport
Forum shows that changes have at times been related to certain activities or
events (Figure 2).
Figure 2: Changes in the
level of the passenger movement charge, 1988–2012
Source: Tourism & Transport Forum Australia, ‘Passenger
movement charge explained’, Tourism & Transport Forum Australia website,
March 2013.
The PMC was initially based on cost recovery, recovering
the cost of processing incoming and outgoing passengers and the cost of issuing
short-term visitors visas.[59]
In 1998 the PMC increased by three dollars to $30. The Government justified
this increase to cover the additional cost associated with the Sydney 2000
Olympic Games.[60]
The Australia National Audit Office (ANAO) notes that this marked a policy
shift.[61]
From here on the PMC was partially aimed at cost-recovery, but was also used as
a general revenue measure.
In 2008 the PMC increased by nine dollars to $47. This increase
was justified on the grounds of partially funding national aviation security
initiatives.[62]
It was also stated that the increase was broadly consistent with changes that
would have been made had the PMC been indexed.[63]
Speaking on the 2008 Bill, Mr Morrison stated:
The passenger movement charge ... is not a charge; it is a tax.
It is a tax, as has been said not only by those who have spoken in this place
by also by the ANAO and on the basis of legal advice that has been presented to
various hearings over time. It is a tax; it is not a charge. The passenger
movement charge increase of $9 announced by the government is a tax grab of
almost $460 million over four years.[64]
The PMC was last increased in 2012 by eight dollars to $55
to fund the establishment of the Asia Marketing Fund.[65]
Mr Morrison, then in opposition, was critical of this. He stated specifically:
Had the government’s proposal, which was considered by the
House yesterday, to increase the passenger movement charge actually been about
genuinely funding border control functions, and directly into those functions,
rather than being a naked tax grab, perhaps it would have had more merit.[66]
Committee
consideration
Senate Economics
Committee
The Bills have been referred to the Senate Economics
Legislation Committee for inquiry and report by 7 November 2016.[67]
Details of the inquiry are at the Committee’s website homepage.[68]
Senate
Standing Committee for the Scrutiny of Bills
At the time of writing, the Senate Standing Committee for
the Scrutiny of Bills had not yet commented on the Bills.
Policy
position of non-government parties/independents
Australian
Labor Party
In May 2015, the Shadow Treasurer stated that the
Australian Labor Party (ALP) would support the 2015–16 Budget announcement to
tax working holiday makers as non-residents, with Chris Bowen noting:
We’ve also been considering some of the Government’s other
measures. Where a measure is sensible and doesn’t offend the principle of
fairness, we will facilitate its passage, even if the Government hasn’t gone
about it in the way we would in office.
Accordingly, Labor will support the passage of the following
measures;
- The change to taxation of holders of Work and Holiday visa
holders.
- The abolition of the large family bonus.
- The removal of the zone tax offset for fly-in fly out
workers.
- Changes to work-related car expense deduction methods.
- The implementation of the “No Jab, No pay” policy.
...
As I said not all these measures are exactly what we would
have done in government and we trust the government has thought through all the
implications and has conducted adequate consultations.[69]
This policy position by the ALP was essentially taken to
the 2016 election, as no separate policy to abolish this arrangement is
included in the Parliamentary Budget Office costings of ALP policies.[70]
That said, the ALP’s position on the 2015–16 announcement
has been critical of the policy at times, although this criticism is focussed
mainly on the policy development process and then the delays in implementation.
In February 2016, the position was that the tax changes needed to be ‘properly
considered’, with a joint media release from the responsible shadow ministers
noting:
Labor believes that any tax on working holiday maker earnings
must be properly considered, designed and carefully calibrated to ensure
measures do not have a counterproductive effect on labour, jobs or tourism
expenditure.
There also needs to be careful consideration of any new plan
to ensure that the effect of a new regime does not simply result in working
holiday makers being pushed into the cash economy, where no tax will be paid at
all.
Labor calls on the Government to take evidence based approach
to the redesign of its working holiday maker taxation policy, in close
consultation with the tourism and agriculture industries.[71]
In April 2016, the ALP outlined ‘three key tests’ for the
Government relating to the 2015–16 Budget announcement (which at this time was
being considered by a review led by the Minister for Tourism and International
Education Senator Richard Colbeck):
First, the Government must demonstrate that it has a plan to
protect and grow demand for working holiday maker visas, not just cede our
competitive edge to lower taxing nations in our region and allow application
figures to continue to fall.
...
Second, Minister Colbeck must be able to show that the
Government is using reliable data on backpacker earnings to generate an
estimate of revenue earned from the introduction of a new backpacker tax.
...
Third, the proposal must have the broad support of the
tourism and agricultural sectors following proper consultation, taking into
account the unique nature of the tourism industry as both an employer of, and
supplier to, working holiday makers.[72]
On 21 June 2016, the ALP remained critical of the implementation
of the policy, noting that advice about a delay to the announced start date of
the proposal (1 July 2016) had not been included in the Pre-Election
Fiscal Outlook and that the Australian Taxation Office had provided, then
retracted, public advice that the measure would commence from 1 July 2016.[73]
The joint media release from the responsible Shadow Ministers noted:
The Government's mishandling of this issue has caused great
uncertainty in the tourism, hospitality and agriculture sectors in particular. There
are around 145,000 working holiday makers present in Australia at any time,
employed across the hospitality, tourism, construction and agricultural sectors.
...
But the major uncertainty created by the Coalition since the
announcement of backpacker tax and the subsequent confusion has seen
applications and arrivals drop significantly, jeopardising harvests across the
country.[74]
During debate on the Bills in the House of Representatives
on 17 October 2016, the ALP confirmed that it would not oppose the Bills
in the House of Representatives, but that it would ‘reserve our rights for a
Senate inquiry to have a proper examination of the issues that get raised’.[75]
The Shadow Treasurer Chris Bowen noted:
We know that the original proposal for this was made with
absolutely no consultation. When we responded to the 2015 budget, we said at
the time, 'We trust that the government has thought through all the
implications and has conducted adequate consultations.' Now we know that that
simply was not the case.
...
The approach that the Labor Party are taking to this matter
is not to oppose the passage of this legislation through the House; rather, we
will ensure in the other place that affected sectors—horticulture, agriculture,
tourism and hospitality—are given the chance to be consulted and to have their
say in a way that they have not been by this government.[76]
Other
parties and independents
Bob Katter supported the 27 September 2016 changes to
the proposed backpacker tax arrangements, but considered that superannuation
payments to backpackers should not be made.[77]
Mr Katter noted:
I don’t want to the farmers to have to pay superannuation to
a person who is not an Australian resident and who on average makes $13 000 a
year if they’re lucky. This 95 per cent grab on superannuation is tax by
another name.[78]
Cathy McGowan indicated that she supported the 27 September
2016 changes to the proposed backpacker tax arrangements, but was critical of
the policy process.[79]
Ms McGowan noted:
The government could get its policies right the first time if
it consulted relevant industries and engaged with rural and regional
communities before making uninformed decisions. This would save considerable
time and expense for those people affected.[80]
Senator Lambie has proposed that the tax arrangements in
Australia should ‘at least’ match the arrangements in place in New Zealand and
flagged some amendments to elements of the Bills.[81]
Senator Lambie noted:
When it comes to competing for vital backpacker farm labour
and tourists - New Zealand is one of our biggest and most aggressive
competitors. So it makes sense for our Government to at least reduce our
backpacker tax rate to one that’s competitive with NZ - at 10.5%.
...
I understand that our farmers want the Government backpacker
legislation – to pass quickly through the Senate – but I will introduce
amendments to the Government’s legislation in the Senate, which reduces the
rate of the Government’s proposed tax from 19% to 10.5%.[82]
The Australian Greens oppose the new tax arrangements,
considering the changes will have a negative impact on growers and the tourism
industry.[83]
The Australian Greens Treasury spokesman, Senator Peter Whish-Wilson, noted in
response to the Government’s 27 September 2016 announcement:
The Greens will vote this new tax down when it comes before
parliament and we are calling on Labor and the cross-bench to do the same. Rather
than penny-pinching from low-paid workers, and putting our agricultural
producers at risk, the Treasurer should be embarking on real economic reform to
raise the billions needed to run our economy. New backpacker arrivals are
already down and that is before the new tax is in place. The Government needs
to abandon this new tax before the impact hits home.[84]
The Nick Xenophon Team supported the reduction in the tax
rate from 32.5 per cent to 19 per cent, but considered that it
remained higher than in New Zealand.[85]
Rebekah Sharkie and Senator Nick Xenophon noted:
The real concern with farms in my electorate is that this new
tax rate is still too high compared to NZ, and in any event, many backpackers
have made a decision not to come to Australia this summer.
...
The changes announced by the government are, of course,
welcome, but the tax rate still puts us at a big competitive disadvantage
compared to New Zealand – another reason why this employment strategy that NXT
is behind will address the barriers many unemployed people experience in
relation to taking on short term work as well as increase the casual workforce
pool for farmers who need every pair of hand[s] working at harvest time.[86]
Position of
major interest groups
With the change in some elements of the policy since the
2015–16 Budget, the position of major interest groups outlined below relates to
the final package, as announced by the Treasurer on 27 September 2016.
The National Farmers’ Federation (NFF) opposed the
tax changes for WHMs announced in the 2015–16 Budget. In February 2016, the NFF
along with its member organisations launched a campaign to encourage the
Government not to proceed with the proposed tax changes, on the basis that they
would ‘erode the agriculture workforce and the prosperity of regional
communities’.[87]
The Chair of the NFF Workforce Productivity Committee, Charlie Armstrong,
noted:
The agriculture industry relies on backpackers to fill severe
labour shortages which are often seasonal and temporary, for example, when
crops are being harvested or milk production is at its peak.
Taxing backpackers at a rate of 32.5 per cent will make work
in Australian agriculture a highly unprofitable proposition.
Furthermore, it will lead to reduced agricultural
productivity and will strip regional communities and businesses of much needed
tourism spending. Already we are seeing signs that the proposed tax rate of
32.5 per cent is scaring working holiday makers away from Australia. In nations
like Canada and New Zealand, they are just as likely to be able to find farm
work that attracts substantially lower amounts of taxation.[88]
In its submission to the 2016–17 Budget, the NFF advocated
for the removal of the tax-free threshold, but for a lower rate to apply than
the 32.5 cents as proposed in the 2015–16 Budget.[89]
The NFF noted:
The NFF supports backpackers paying tax, but 32.5c in every
dollar is too high. It means many backpackers will choose to go elsewhere, or
stay in Australia for shorter periods. It means fewer workers on Australian
farms, and more workers attracted to the cash economy.
A fairer approach would see the usual tax rules apply to
backpackers, but with no tax-free threshold. This would keep Australia
competitive against comparable tourist destinations (Canada, New Zealand) which
is important, because the number of backpackers coming to Australia is
declining, and other countries have much lower tax rates.[90]
Following the 27 September 2016 announcement, the NFF generally
welcomed the reduction in the proposed tax rate from 32.5 per cent to
19 per cent, with the NFF President being reported as saying the changes
were ‘fair and reasonable’.[91]
The peak body for Queensland horticulture, Growcom,
considered that the reduction in the tax rate to 19 per cent would be
competitive relative to other working holiday destinations.[92]
The CEO of Growcom noted:
[I]t was pleasing to see that the Federal Government had
finally taken the deep concerns of the agricultural and tourism sectors
seriously, even if it took two reviews and countless hours of lobbying to do
so.
The government has taken on board the warnings of the tax’s
dire economic effects on horticultural growers and other small businesses in
regional towns which are dependent on healthy backpacker numbers.
Growers across Australia will be breathing a sigh of relief
at this news and can finally make decisions about planting next year’s crop.[93]
Horticulture industry group Ausveg also welcomed
the changes to the WHM tax arrangements announced on 27 September 2016.[94]
The CEO of Ausveg noted:
The decision to reduce the tax rate from 32.5 per cent is a
welcome relief for our industry and we are pleased to see a tax more in line
with the rate that backpackers pay in New Zealand, Canada and the United
Kingdom.
It remains to be seen what impact the revised tax rate will
have on the number of backpackers coming to Australia, but we are thankful to
the government for coming to a compromise position significantly lower than
what was initially proposed. We will monitor backpacker numbers under the revised
rate to see if backpacker numbers falter and whether further intervention is
required.[95]
The Tourism & Transport Forum (TTF) generally
welcomed the reduction in the proposed tax rate from 32.5 per cent to
19 per cent but considered that the five dollar increase in the PMC
was a ‘blatant cash grab’.[96]
The TTF CEO noted:
While I am very disappointed that the Federal Government
wishes to push ahead with the backpacker tax, 19 per cent is a lot better than
32.5 per cent ... Industry has been completely blindsided by this decision to
increase the PMC by $5 – a 9 per cent hike in the rate. At no point was it
flagged in any discussions in which we took part and is a bitter disappointment
that we’ve been slapped with this tax hike on every traveller – Australian or
international visitor – heading overseas.[97]
The Australian Chamber of Commerce and Industry
(ACCI) welcomed the changes made by the Government in its 27 September
2016 announcement, but considered the overall impact of the changes ‘will be a
damaging brake on tourism’.[98]
The CEO of ACCI noted:
The Government is slugging tourism exports in a way it would
not do for agricultural or mineral exports. Tourism is one of Australia’s
export heroes, delivering jobs, export income and government revenue. The Government
is undermining this progress on the questionable assumption that demand will
not be affected by price.[99]
Financial
implications
The policy as announced at the 2015–16 election was
expected to provide additional revenue of $540 million in accrual terms
over the four years to 2018–19.[100]
During the election period, the Treasury costed the
Government’s announcement of a deferral of the start date for the original
package from 1 July 2016 to 1 January 2017 to be a reduction in expected revenue
of $40 million over the years 2016–17 and 2017–18 in accrual terms.[101]
The financial impact of the final package of measures, as
announced by the Treasurer on 27 September 2016, included further
information in cash terms of the impact of the revised and additional measures
included in the package (Table 4).[102]
Table 4: Financial impact in cash terms of measures
proposed by the Bills and related policies ($ million)
| Measures |
2016–17 |
2017–18 |
2018–19 |
2019–20 |
Total |
| Measures included in the Bill |
| Lower tax rate for all working holiday makers |
-25 |
-75 |
-100 |
-100 |
-300 |
| Increase tax on the Departing Australia Superannuation
Payment to 95 per cent |
0 |
35 |
35 |
35 |
105 |
| Providing greater flexibility for employers of working
holiday makers |
0 |
0 |
0 |
0 |
0 |
| Reduce working holiday maker visa application charge by
$50 |
0 |
-10 |
-10 |
-10 |
-30 |
| Increase passenger movement charge by $5 |
0 |
55 |
100 |
105 |
260 |
| Measures to be included in future appropriation Bills |
| Tourism Australia advertising campaign |
-2.5 |
-5.0 |
-2.5 |
0 |
-10 |
| Compliance for working holiday makers employer register |
-3.5 |
-3.5 |
-1.5 |
-1.5 |
-10 |
| Total |
-31 |
-3.5 |
21 |
28.5 |
15 |
Source: Explanatory
Memorandum, Income Tax Rates Amendment (Working Holiday Maker Reform) Bill
2016 [and related Bills], pp. 6–7.
Statement of Compatibility with Human Rights
As required under Part 3 of the Human Rights
(Parliamentary Scrutiny) Act 2011 (Cth), the Government has assessed the
Bills compatibility with the human rights and freedoms recognised or declared
in the international instruments listed in section 3 of that Act. The
Government considers that the Bills are compatible.[103]
Parliamentary
Joint Committee on Human Rights
At the time of writing, the Parliamentary Joint Committee on
Human Rights had not yet commented on the Bills.
Income Tax
Rates Amendment (Working Holiday Maker Reform) Bill 2016
The Income Tax Rates Amendment (Working Holiday Maker
Reform) Bill 2016 makes amendments to the Income Tax Rates
Act 1986[104]
to define the terms working holiday maker and working holiday taxable
income and specify the relevant tax rates that apply to different levels of
income.
Background
As previously noted, many WHMs currently claim the tax-free
threshold available to resident taxpayers when they are unlikely to be eligible
for it. As such, they should be taxed as non-resident taxpayers and face tax
rates of 32.5 per cent from the first dollar earned.
Key issues
and provisions
Item 2 amends the Income Tax Rates Act 1986
to insert new section 3A to define the terms working holiday maker and working
holiday taxable income. The definition of a working holiday maker
covers those that hold either a Working Holiday (subclass 417) visa or Work and
Holiday (subclass 462) visa or a bridging visa in certain circumstances. The
definition of working holiday taxable income essentially covers income
from sources in Australia earned while working as a WHM less any appropriate
deductions.
Items 3 to 7 insert provisions to:
- specify
the rates of tax on a taxpayer’s working holiday taxable income to be
19 cents per dollar for incomes up to $37,000
- the
applicable rates on thresholds beyond this and
- to
provide that the tax rates for residents and non-residents apply as appropriate
for taxable income that is not earned as a WHM.
Item 8 provides that the changes proposed by the
Bill will commence on 1 January 2017.
Can the
status quo be maintained?
As previously noted, the interpretation of the existing law
in several decisions by the AAT provided some clarification of when WHMs
qualify as residents and confirmed that applying the ‘183 day’ test alone was
not sufficient for satisfying residence criteria, and that a full assessment of
the facts and circumstances is required to ascertain residency status.[105]
Under the existing law it appears that many WHMs should already
be paying tax at the non-resident rate of 32.5 per cent from the first
dollar earned. At this tax rate, it may be that concerns about labour supply
and tax competitiveness become more prominent.
In evidence to the Senate Economics Committee inquiry to the
Bills, KPMG noted:
Retaining the current legislation regime will perpetuate the
uncertainty over the current residency test and the associated tax compliance
risks.[106]
This view was confirmed by the Commissioner of Taxation in a
media release on 3 November 2016, which set out how the ATO would apply
the tax law to WHMs if the Bills do not pass the Parliament:
The ATO will apply the current law. Working holiday makers
who are travelling and working in various locations around Australia will be
non-residents for tax purposes, meaning they will commence paying 32.5% tax
from the first dollar for income earned in Australia.
We consider that most working holiday makers are
non-residents due to their pattern of working and holidaying while in
Australia.
We will help working holiday makers understand Australia’s
self-assessment tax system, so that they correctly advise their employers of
their residency status and have correct tax withheld. We will also work to
ensure that working holiday makers correctly prepare their tax returns. This
will include working with tax agents so that their advice is consistent with
the ATO view, as confirmed by recent Tribunal decisions. It will also include
some checking of returns.[107]
Is a
19 per cent tax rate on the first dollar earned competitive with other
backpacker destinations?
One of the arguments for the proposed package is that
treating WHMs as non-resident taxpayers facing a marginal tax rate of
32.5 per cent from the first dollar earned made Australia ‘uncompetitive’
as a backpacker destination.[108]
A number of recent surveys have pointed to the imposition of
the tax having a ‘chilling’ effect on the number of WHMs visiting Australia.
For example, a survey undertaken by Monash University and YHA showed the
government is risking a ‘60 per cent plummet in the number of WHMs coming to
Australia’ and that ‘57 per cent of WHMs said they would spend less time
travelling in Australia and 69 per cent would spend less on tours’.[109]
Other surveys cited by the NFF in its submission to the review had similar
findings:
A survey of 1434 mostly working holiday makers after the 2015
Budget found that:
- 69% knew about how Australian taxes worked before they came here;
- 86% thought they were eligible for the tax free threshold;
- 52% had decided not to stay working in Australia after 1 July 2016; and
- 84% had since heard of backpackers changing their plans about coming to
Australia.
A second survey of 5000 working holiday makers in January
2016 showed similar results:
- 89% of respondents said if they knew about the backpacker tax before
coming to Australia they would have considered going elsewhere;
- 90% of respondents said they would not do fruit picking / harvest / 2nd
year visa work if taxed 32.5%;
- 89% of respondents said paying 32.5% would deter them from working in
Australia altogether; and
- 95% of respondents thought the tax would deter future working holiday
makers from visiting Australia.[110]
Included in the material accompanying the Treasurer’s
27 September 2016 announcement of the revised package of measures was
information about the relative tax position of WHMs in selected countries:
- the
United Kingdom
- New
Zealand and
- Canada.[111]
This material is also reproduced in the Explanatory
Memorandum.[112]
Using exchange rates based on purchasing power parity (which use the price that
a person is able to purchase the same bundle of goods and services across different
countries), the net after tax income under the proposed 19 per cent rate
was higher than the selected countries, in which WHMs paid no, or very little
tax. In light of Senator Lambie’s proposal to apply a 10 per cent rate,
this scenario is also included, providing an even higher after-tax income than
the selected countries (Figure 3).
Figure 3: International comparison of total income and net income (average per
WHM, Purchasing Power Parity adjusted exchange rate)
Source: Explanatory
Memorandum, Income Tax Rates Amendment (Working Holiday Maker Reform) Bill
2016 [and related Bills], p. 51; Parliamentary Library estimates for the
Australia 10 per cent and Australian existing arrangements (resident) scenario
based on applicable tax rates.
Treasury
Laws Amendment (Working Holiday Maker Reform) Bill 2016
The Treasury Laws Amendment (Working Holiday Maker Reform)
Bill 2016 includes changes to a range of legislation and regulations. It will:
Key issues
and provisions
Schedule
1—Reduction in visa application charge
Persons seeking a visa are generally required to pay an
application fee.[122]
These fees are set out in the Migration Regulations 1994. Visa application
charges for WHM visas have more than doubled in nominal and real terms since
2008–09. The proposed reduction to $390 puts the application at around the
same level as 2013–14 but would still be almost double the 2008–09 amount if it
had been linked to inflation (Figure 4).
Figure 4: Working holiday maker visa application charges,
2008–09 to 2016–17
Source: Explanatory
Memorandum, Income Tax Rates Amendment (Working Holiday Maker Reform) Bill
2016 [and related Bills], p. 44; Parliamentary Library estimates based on
Australian Bureau of Statistics (ABS), Consumer
Price Index, Australia, Jun 2016, ‘Tables 1 and 2: CPI: all groups,
index numbers and percentage changes’, cat. no. 6401.0, ABS, Canberra, 27 July
2016.
Item 1 of Schedule 1 of the Bill amends the
Migration Regulations 1994 to change the visa application charge for the Work
and Holiday visa (subclass 462) and Working Holiday visa (subclass 417) from
$440 to $390.
Schedule
2—Registration of employers of working holiday makers
Under existing arrangements, employers are required to be
registered by the Australian Taxation Office to facilitate the payment of tax
withheld from employees. Employers are required to remit tax withheld on a
twice-weekly, monthly or quarterly basis (depending on the annual amounts
withheld each year).[123]
Item 4 includes amendments to the Taxation
Administration Act 1953 to require employers of WHMs to be registered with
the Commissioner of Taxation to allow them to withhold tax at the applicable
WHM tax rates. The Commissioner will be required to register an entity
following a declaration that the entity:
- has
a genuine business requirement to employ one or more WHMs (unless the entity is
not carrying on a business)
- agrees
to comply with the Fair Work Act 2009 in relation to its employment of
any individual who is a WHM, and
- agrees
to check that any individual it employs as a WHM holds a visa that causes that
person to be a WHM (proposed subsection 16–147(1) of Schedule 1 to the Taxation
Administration Act 1953).
Such registration is one of the matters the Commissioner
must have regard to in making a withholding schedule (item 3).
A failure to be registered in accordance with the
requirements will leave the entity liable to an administrative penalty of a
maximum 20 penalty units (currently $3,600) (proposed subsection
16–146(4) of Schedule 1 to the Taxation Administration Act 1953).[124]
Not all information contained in the Australian Business Register
(established by the A New Tax System (Australian Business Number) Act 1999)
is publicly available. Information that may be provided is set out in
subsection 26(3) of the A New Tax System (Australian Business Number) Act
1999 and in related regulations.[125]
Information that may be disclosed includes details such as the entity’s name,
Australian Business Number (ABN) and contact details.[126]
Item 1 amends subsection 26(3) of the A New Tax
System (Australian Business Number) Act 1999 so as to allow information on whether
the entity is registered as a WHM employer or whether the entity’s WHM employer
registration has been cancelled to be disclosed.
This change will allow individuals to look up a business on
the Australian Business
Register to determine whether they are registered to withhold tax for WHMs
at the applicable tax rates. [127]
Schedule
3—Reporting on working holiday makers
Existing section 352–5 of Schedule 1 to the Taxation
Administration Act 1953 requires the Commissioner of Taxation to prepare an
annual report on the working of indirect tax laws. The report is required to
include a report on ‘any breaches or evasions of the indirect tax laws that the
Commissioner knows about’.[128]
These requirements are satisfied through reporting in the Australian Taxation
Office’s annual report.[129]
Schedule 3 of the Bill amends the Taxation
Administration Act 1953 to include provisions that will require the
Commissioner of Taxation to prepare an annual report on WHMs. There are no
prescriptive requirements about what is to be included in such a report, except
that it must include statistics and information derived by the Commissioner
from the registration process (proposed subsection 352–25(2)). The Treasury
fact sheet that accompanied the Treasurer’s 27 September announcement includes
examples of possible reporting on WHM employment, which covers issues such as:
- location
of WHM employers
- numbers
of WHMs employed by state/territory and sector, and
- average
earnings of WHMs.[130]
Schedule
4—Protected information
The Taxation Administration Act 1953 creates an
offence for the disclosure of ‘protected information’ by ‘taxation officers’.[131]
However, there are a range of circumstances where disclosure of tax information
to another entity is permitted. This includes disclosure to the FWO where the
record or disclosure:
(a) is of the fact of an entity’s actual or reasonably
suspected non-compliance with a taxation law; and
(b) is for the purpose of ensuring the entity’s compliance
with the Fair Work Act 2009.[132]
Item 1 of Schedule 4 amends these arrangements
so as to remove the requirement for disclosures to the FWO to concern an
entity’s non-compliance with a taxation law. Instead, the Commissioner will be
able to disclose information to the FWO for the broader purpose of ensuring an
entity’s compliance with the Fair Work Act.
Item 2 of Schedule 4 of the Bill provides that
the expanded disclosure arrangements will commence on 1 January 2017. After
that date, relevant information can be disclosed to the FWO regardless of
whether it was acquired by the Commissioner before or after that date.
Superannuation
(Departing Australia Superannuation Payments Tax) Amendment Bill 2016
The Superannuation (Departing Australia Superannuation
Payments Tax) Amendment Bill 2016 amends the Superannuation
(Departing Australia Superannuation Payments Tax) Act 2007 [133]
to increase to 95 per cent the rate of tax on superannuation payments to WHMs
from 1 July 2017 after they leave Australia.
Background
Under the Superannuation
Guarantee (Administration) Act 1992,[134]
employers are generally required to contribute a minimum percentage (the
‘charge percentage’) of an employee’s ordinary earnings to a superannuation
fund on behalf of the employee. This percentage is currently 9.5 per cent.[135]
One of the key exemptions relevant to WHMs is that no contribution for an
employee is required if their salary or wages is less than $450 per month.[136]
This $450 threshold has remained unchanged since the introduction of the
superannuation guarantee scheme from 1 July 1992.[137]
Upon leaving Australia, a WHM is generally able to claim
these employer contributions, known as the Departing Australia Superannuation
Payment (DASP), less an amount of tax. The DASP and tax arrangements were introduced
from 1 July 2002.[138]
Under existing arrangements, the rate of tax applied to the
DASP depends on the composition of the balance of the member’s superannuation:
- tax
free component—nil
- element
taxed in the fund of the taxable component—35 per cent, and
- element
untaxed in the fund of the taxable component—45 per cent.[139]
There is limited information on the extent of revenue
raised from the application of the DASP tax.[140]
Key issues
and provisions
Item 1 of Schedule 1 of the Superannuation
(Departing Australia Superannuation Payments Tax) Amendment Bill 2016 inserts proposed
subsection 5(3) into the Superannuation (Departing Australia
Superannuation Payments Tax) Act 2007 to provide that the DASP payable to a
WHM will be taxed at a uniform tax rate of 95 per cent, except for the
tax-free component, which will retain a nil tax rate.
Should
working holiday makers be paid superannuation contributions?
The application of a 95 per cent withholding tax rate
for DASP amounts effectively means that almost all amounts paid as employer
superannuation contributions will ultimately be transferred to the Australian
Government. As such, some participants have argued that this on-cost is an
additional tax on labour in certain industries and can also impose additional
administration and compliance costs on employers.
There have been a number of suggestions for changes to
superannuation contribution arrangements as an alternative to this, including:
- no
employer contribution required but instead paid directly to relevant employees[141]
- no
employer contribution required/employers exempted from making contributions[142]
- no
employer contribution with amounts redirected for other purposes such as regional
youth employment programs or other workforce development initiatives or rural
research and development organisations[143]
- higher
minimum monthly threshold required for employer contributions.[144]
The Deloitte report conducted as part of the visa review
canvassed views about superannuation arrangements and noted:
In each stakeholder engagement superannuation was raised as a
contentious matter amongst employers of working holiday makers in both the
agriculture and tourism sectors. The primary objection was around why such
money was put aside for workers who had no intention of retiring in Australia.
Equality between Australian workers and foreign workers was important to all
stakeholders, however at the moment employers feel the system is not equitable,
or serving its purpose. Some stakeholders did acknowledge the difficulties
around making any changes to the superannuation scheme.
Stakeholder engagements and submissions raised questions
around whether working holiday makers fit the purpose of why superannuation was
implemented. General consensus was that people should not be paid
superannuation if they have no intention to use it for its intended purpose.
Superannuation was viewed by many employers as a bonus that working holiday
makers take out of the country upon leaving.[145]
The Passenger
Movement Charge Amendment Bill 2016
The Passenger Movement Charge Amendment Bill 2016 amends the
Passenger
Movement Charge Act 1978[146]
to increase the Passenger Movement Charge from $55 to $60 from 1 July 2017.
Key issues
and provisions
Section 6 of the Passenger
Movement Charge Act 1978 currently specifies that the rate of the passenger
movement charge is $55. Item 1 of the Bill amends section 6 to replace
$55 with $60.
Efficiency
and effectiveness as a tax
An effective tax is a tax which does little to distort the
market and is simple to administer. Modelling by the International Air
Transport Association suggests that an increase in the PMC by ten per cent will
decrease the number of leisure passengers travelling from Australia by five to
seven per cent.[147]
This implies that there is inelastic demand at that point, meaning demand will
decrease proportionally less than the increase in price. It should also be
noted that this relates to leisure passengers. The business passengers’ demand
is likely to be even more inelastic.
The PMC is currently collected at the time of ticket sale
by airline and shipping companies before it is distributed to the Commonwealth.
Airline and shipping companies have likely developed effective systems to
manage this process. Airlines have argued however, that the PMC imposed significant
net costs.[148]
Their concerns seem to primarily relate to when passengers are not initially
charged the PMC (such as when tickets are purchased internationally or via
code-share) in which case the airlines are still liable for the PMC regardless
of non-payment by the passenger.[149]
It is questionable whether this constitutes a significant net cost. Previously the
airlines were allowed a margin or tolerance in these cases which had the effect
of excusing them from liability in cases where passengers had not paid the PMC,
up to a prescribed maximum percentage of their total PMC liability.[150]
This arrangement ceased by 2001.
The PMC is an effective tax, as it likely does little to
distort the market, and collects charges in relation to passengers departing Australia,
even if the actual passenger does not pay it (and airlines instead cover the
charge). It is another matter, however, whether the PMC is an efficient tax.
The Henry Tax Review criticised the PMC stating:
As the PMC does not provide meaningful price signals related
to the costs or risk associated with border protection, and is on a relatively
narrow base, other sources of tax revenue would be more efficient. Further, the
funding provided by the charge may impede the adoption of more efficient cost
recovery, such as charging airports directly for some of these services.[151]
The Senate Standing Committee on Legal and Constitutional
Affairs, however, previously said that it was:
... of the view that it is reasonable that a proportion of the
costs of providing aviation security should be paid for by those who actually
use aviation services. The PMC, as such, appears to be an appropriately
targeted tax.[152]
Is the Passenger
Movement Charge regressive?
Increasing the PMC by five dollars (just under 10 per cent)
would only reduce demand by leisure passengers by five to seven per cent,
according to figures provided by the Australian Tourism Export Council. It is
likely that the reduction in demand from business passengers would be even
less. Increasing the PMC would, however, further add to the regressive nature
of the PMC.
The PMC is regressive, as the share it represents in a
ticket’s final price falls the more the ticket costs. The PMC, for example,
represents a far higher share for short international flights, such as to New
Zealand or Bali, compared to more expensive long haul flights. This is even
more so considering the PMC does not differentiate between airfares, such as
business and first class.
The PMC is therefore an effective tax, but it is also
regressive and inefficient.
[1]. Parliament
of Australia, ‘Income
Tax Rates Amendment (Working Holiday Maker Reform) Bill 2016 homepage’,
Australian Parliament website.
[2]. Parliament
of Australia, ‘Treasury
Laws Amendment (Working Holiday Maker Reform) Bill 2016 homepage’, Australian
Parliament website.
[3]. Parliament
of Australia, ‘Superannuation
(Departing Australia Superannuation Payments Tax) Amendment Bill 2016 homepage’,
Australian Parliament website.
[4]. Parliament
of Australia, ‘Passenger
Movement Charge Amendment Bill 2016 homepage’, Australian Parliament
website.
[5]. Australian
Government, Budget
measures: budget paper no. 2, 2015–16, p. 26.
[6]. Ibid.
[7]. J
Hockey, ‘Second
reading speech: Appropriation Bill (No. 1) 2015–2016’, House of
Representatives, Debates, 12 May 2015, p. 3804.
[8]. See
for example, H Kempton, ‘Anger
grows over tax on backpackers’, Hobart Mercury, 15 May 2015,
p. 2 and ‘Tax
hit for holiday workers tipped to cause headaches’, Northern Territory
News, 20 May 2016, p. 19.
[9]. B
Joyce (Deputy Prime Minister), A Ruston (Assistant Minister for Agriculture and
Water Resources), K Pitt (Assistant Minister to the Deputy Prime Minister), Review of taxation arrangements for working holiday maker
visa programme a sensible approach for agriculture, joint media
release, 16 March 2016.
[10]. Ibid.
[11]. C
Colbeck (Minister for Tourism and International Education), A Ruston (Assistant
Minister for Agriculture and Water Resources), K Pitt (Assistant Minister to
the Deputy Prime Minister), Industry
consultations begin on working holiday maker tax arrangements, joint
media release, 21 March 2016; C Colbeck (Minister for Tourism and
International Education), A Ruston (Assistant Minister for Agriculture and
Water Resources), K Pitt (Assistant Minister to the Deputy Prime Minister), Statement
regarding the review of taxation arrangements for working holiday makers,
joint media release, 8 April 2016.
[12]. K
O’Dwyer (Minister for Small Business and Assistant Treasurer), Press
conference: Murrumbateman, NSW: working holiday visa review, media
release, 17 May 2016.
[13]. Ibid.
[14]. Ibid.
[15]. B
Joyce (Deputy Prime Minister) and L Hartsuyker (Assistant Minister to the
Deputy Prime Minister), Working
holiday maker visa review now underway, joint media release,
15 August 2016.
[16]. Ibid.
[17]. Deloitte
Touche Tohmatsu Limited and Department of Agriculture and Water Resources
(DAWR), Independent
stakeholder engagement on the working holiday maker visa review,
Deloitte, [New York], September 2016.
[18]. DAWR,
‘Working
holiday maker visa review: submissions received’, DAWR website, last
reviewed 29 September 2016.
[19]. S
Morrison (Treasurer), Better
working holiday maker tax arrangements, media release,
27 September 2016.
[20]. Ibid.
[21]. This
measure was not included in the Treasurer’s media release on 27 September
2016, but was noted by the Treasurer in a media conference on the same day as
another change that would also be made (S Morrison (Treasurer), Press
conference Canberra: better working holiday maker tax arrangements; GST;
asset recycling, transcript, 27 September 2016, p. 2).
[22]. Department
of Immigration and Border Protection (DIBP), ‘What
is the working holiday maker program?’, DIBP website.
[23]. Much
of this information in this section is drawn from J Phillips, Working
holiday makers in Australia: a quick guide, Research paper series,
2015–16, Parliamentary Library, Canberra, 2016.
[24]. C
Brennan, ‘Backpackers
or working holiday makers? Working tourists in Australia’, Qualitative
Sociology Review, 10(3), July 2014, pp. 94–114.
[25]. Ibid.,
pp. 99–111.
[26]. DIBP,
‘Working Holiday visa
(subclass 417)’, DIBP website.
[27]. J
Howe and A Reilly, Submission
to the DIBP, Review of Skilled Migration and temporary activity visa
programmes, 2014, p. 8.
[28]. A
full list of partner countries and the year they joined is provided in departmental
WHM reports.
[29]. This
period was extended from three to six months in 2006.
[30]. Phillips,
Working holiday makers in Australia: a quick guide, op. cit., p. 2.
[31]. Ibid.
[32]. Ibid.
[33]. A
full list of partner countries and the year they joined is provided in departmental
WHM reports.
[34]. DIBP,
‘Work and Holiday visa
(subclass 462)’, DIPB website.
[35]. A
full list of the different visa caps are provided in in departmental
WHM reports.
[36]. DIBP,
‘Working
Holiday Maker visa (subclasses 417 and 462) initiatives to support northern Australia’,
DIBP website.
[37]. Migration Legislation
Amendment (2016 Measures No. 4) Regulation 2016.
[38]. Phillips,
Working holiday makers in Australia: a quick guide, op. cit., p. 2.
[39]. A
Reilly, ‘Low-cost
labour or cultural exchange? Reforming the Working Holiday visa programme’,
The Economic and Labour Relations Review, 26(3), September 2015,
p. 480.
[40]. Schedule
7 of the Income
Tax Rates Act 1986.
[41]. Australian
Government, Re:think
tax discussion paper: better tax system, better Australia, The
Treasury, Canberra, March 2015, p. 30.
[42]. See
K Swoboda, Clean
Energy (Income Tax Rates Amendments) Bill 2011 [and] Clean Energy (Tax Laws
Amendments) Bill 2011, Bills digest, 65, 2011–12, Parliamentary
Library, Canberra, 27 October 2011, p. 11.
[43]. Subsection
6(1), Income Tax
Assessment Act 1936.
[44]. Ibid.
[45]. Australian
Taxation Office, Income tax:
residency status of individuals entering Australia, Taxation ruling, TR
98/17.
[46]. The
three AAT decisions are Koustrup and Commissioner of Taxation, [2015] AATA
126; Jaczenko and Commissioner of Taxation, [2015] AATA
125; and Clemens and Commissioner of Taxation, [2015] AATA
124.
[47]. See
for example: Koustrup and Commissioner
of Taxation [2015] AATA 126 , as per Deputy President Professor
R Deutsch at paras [23], [48], and [49]: ‘As already set out, plainly the
Applicant had no intention of taking up residence in Australia during the year
ended 30 June 2013. It follows that despite the Applicant having spent more
than one half of the year in Australia, she is not a resident because the
qualification in s 6(1)(a)(ii) is satisfied.’ (see also paras [50–51]).
[48]. Explanatory
Memorandum, Income Tax Rates Amendment (Working Holiday Maker Reform) Bill
2016 [and related Bills], p. 42.
[49]. Ibid.
[50]. Ibid.,
p.43.
[51]. Y
Tan, S Richardson, L Lester, T Bai and L Sun, Evaluation
of Australia’s working holiday maker (WHM) program, Department of
Immigration and Citizenship, Canberra, 27 February 2009.
[52]. Ibid.,
p. 1.
[53]. Australian
Tourism Export Council (ATEC), The
importance of the Working Holiday visa (subclass 417), Position paper,
ATEC, Sydney, February 2012, p. 10.
[54]. Reilly,
‘Low-cost labour or cultural exchange, op. cit., p. 482.
[55]. See,
for example, Fair Work Ombudsman, Fair
Work Ombudsman to review entitlements of overseas visa-holders on working
holidays, media release, 4 August 2014.
[56]. Senate
Standing References Committee on Education and Employment, A
national disgrace: the exploitation of temporary work visa holders,
Senate, Canberra, March 2016, p. 163 and 196.
[57]. Originally
legislated through the Departure Tax
Collection Act 1978.
[58]. Departure Tax
Amendment Act 1994.
[59]. Australian
National Audit Office (ANAO), Passenger
Movement Charge: follow-up audit, Audit report, 12, 2000–01, ANAO,
Canberra, October 2000, p. 13.
[60]. W
Truss, ‘Second
reading speech: Passenger Movement Charge Amendment Bill 1998’, House of
Representatives, Debates, 28 May 1998, p. 4068.
[61]. ANAO,
Passenger movement charge, op. cit., p. 31.
[62]. R
Debus, ‘Second
reading speech: Passenger Movement Charge Amendment Bill 2008’, House of
Representatives, Debates, 28 May 2008, p. 3471.
[63]. Ibid.
[64]. S
Morrison, ‘Second
reading speech: Passenger Movement Charge Amendment Bill 2008’, House of
Representatives, Debates, 4 June 2008, p. 4416.
[65]. J
Clare, ‘Second
reading speech: Passenger movement Charge Amendment Bill 2012’, House of
Representatives, Debates, 23 May 2012, p. 5223.
[66]. S
Morrison, ‘Second
reading speech: Migration (Visa Evidence) Charge Bill 2012, Migration (Visa
Evidence) Charge (Consequential Amendments) Bill 2012’, House of
Representatives, Debates, 21 June 2012, p. 7572.
[67]. Australia,
Senate, Journals,
11, 2016–17, 13 October 2016, p. 326.
[68]. Senate
Standing References Committee on Economics, ‘Working
Holiday Maker Reform package’, Inquiry homepage.
[69]. C
Bowen (Shadow Treasurer), Labor
and the economy owning the future: National Press Club address,
transcript, 20 May 2015, p. 7.
[70]. Parliamentary
Budget Office (PBO), ‘Appendix
F: costing documentation for Labor’s election commitments’, Post-election
report of election commitments: 2016 general election, PBO, Canberra,
5 August 2016.
[71]. C
Bowen (Shadow Treasurer), A Albanese (Shadow Minister for Tourism) and J
Fitzgibbon (Shadow Minister for Agriculture, Fisheries and Forestry), Government
must consult on backpacker tax, joint media release, 23 February
2016.
[72]. A
Albanese (Shadow Minister for Tourism) and J Fitzgibbon (Shadow Minister for
Agriculture, Fisheries and Forestry), New
backpacker tax must stack up, joint media release, 6 April 2016.
[73]. C
Bowen (Shadow Treasurer), A Albanese (Shadow Minister for Tourism) and J
Fitzgibbon (Shadow Minister for Agriculture, Fisheries and Forestry), Coalition
shambles on backpacker tax exposed, joint media release, 21 June
2016.
[74]. Ibid.
[75]. C
Bowen, ‘Second
reading speech: Income Tax Rates Amendment (Working Holiday Maker Reform) Bill
2016, Treasury Laws Amendment (Working Holiday Maker Reform) Bill 2016,
Superannuation (Departing Australia Superannuation Payments Tax) Amendment Bill
2016, Passenger Movement Charge Amendment Bill 2016’, House of
Representatives, Debates, 17 October 2016, p. 25.
[76]. Ibid.
[77]. B
Katter (Leader of Katter’s Australian Party), Backpacker’s
tax 2.0 is no victory, media release, 29 September 2016.
[78]. Ibid.
[79]. C
McGowan (Independent Member for Indi), Government
must treat rural and regional Australia better: McGowan, media release,
28 September 2016.
[80]. Ibid.
[81]. J
Lambie (Jacqui Lambie Network Independent Tasmanian Senator), Australia’s
backpacker tax should match New Zealand’s at 10.5% - Lambie, media
release, 27 September 2016.
[82]. Ibid.
[83]. R
Siewert (Australian Greens spokesperson on Agriculture), Don’t
defer the backpacker tax, dump it: Greens, media release, 17 May
2016.
[84]. P
Whish-Wilson (Greens Treasury spokesperson), Liberals
congratulate themselves on removing our fruit growers' competitive advantage,
media release, 29 September 2016.
[85]. Nick
Xenophon Team, Backpakcer
tax change: not so much a backflip as a sideways shuffle, media
release, 28 September 2016.
[86]. Ibid.
[87]. National
Farmers’ Federation, Petition
launched against proposed backpackers' tax, media release,
2 February 2016.
[88]. Ibid.
[89]. National
Farmers’ Federation, Submission
to the Treasury, 2016–17 pre-Budget submissions, The
Treasury, Canberra, 22 February 2016, p.21.
[90]. Ibid.
[91]. K
Barow, ‘Turnbull
Government drops proposed 32.5 percent backpacker tax: instead, working
holidaymakers will be taxed at a lower rate’, The Huffington Post
Australia, 27 September 2016.
[92]. Growcom,
19%
backpacker tax rate decision is a relief for horticulture growers,
media release, 27 September 2016.
[93]. Ibid.
[94]. AUSVEG,
Backpacker
tax resolution a relief for growers, media release, 27 September
2016.
[95]. Ibid.
[96]. Tourism
& Transport Forum Australia, Backpacker
tax decision still treats tourism industry as a cash cow, media
release, 27 September 2016.
[97]. Ibid.
[98]. Australian
Chamber of Commerce and Industry, Backpacker
changes give with one hand but take with the other, media release,
27 September 2016.
[99]. Ibid.
[100]. Australian
Government, Budget measures: budget paper no. 2: 2015–16, op. cit.,
p. 26.
[101]. The
Treasury and Department of Finance, Public
release of 2016 election commitment costing: delay to commencement of working
holiday makers 2015–16 Budget measure, Costing identifier, COA
005, The Treasury and Department of Finance, Canberra, 17 May 2016.
[102]. Morrison,
Better working holiday maker tax arrangements, op. cit.
[103]. The
Statement of Compatibility with Human Rights can be found at page 33 of the
Explanatory Memorandum to the Bills.
[104]. Income Tax Rates
Act 1986.
[105]. Explanatory
Memorandum, Income Tax Rates Amendment (Working Holiday Maker Reform) Bill 2016
[and related Bills], op. cit., p. 42.
[106]. KPMG,
Submission,
no. 7, to the Senate Standing Committee on Economics Legislation, Inquiry
into the Working Holiday Maker Reform package, 20 October 2016,
p. 1.
[107]. Australian
Taxation Office, Commissioner
clarifies tax arrangements for working holiday makers, media release,
3 November 2016.
[108]. Explanatory
Memorandum, Income Tax Rates Amendment (Working Holiday Maker Reform) Bill 2016
[and related Bills], op. cit., p. 45; S Morrison (Treasurer), ‘Second
reading speech: Income Tax Rates Amendment (Working Holiday Maker Reform) Bill
2016’, House of Representatives, Debates, 12 October 2016,
p. 5.
[109]. Tourism
& Transport Forum Australia, Survey
shows backpacker tax could smash number of working holiday makers by 60 per
cent, media release, 23 August 2016.
[110]. National
Farmers’ Federation, Submission
to Department of Agriculture and Water Resources, Inquiry into working
holiday maker visa review, 1 September 2016, p. 12.
[111]. The
Treasury, Working holiday maker reform package,
Fact sheet, The Treasury, 2016.
[112]. Explanatory
Memorandum, Income Tax Rates Amendment (Working Holiday Maker Reform) Bill 2016
[and related Bills], op. cit., p. 51.
[113]. Migration Regulations
1994.
[114]. Treasury
Laws Amendment (Working Holiday Maker Reform) Bill 2016, Schedule 1,
item 1.
[115]. A New Tax System
(Australian Business Number) Act 1999.
[116]. Income Tax
Assessment Act 1997.
[117]. Taxation
Administration Act 1953.
[118]. Treasury
Laws Amendment (Working Holiday Maker Reform) Bill 2016, Schedule 2, items 4
and 5.
[119]. Ibid.,
Schedule 2, item 4.
[120]. Ibid.,
Schedule 3, items 1 to 3.
[121]. Ibid.,
Schedule 4, item 1.
[122]. DIBP,
‘Fees and charges for visas’,
DIBP website.
[123]. Australian
Taxation Office (ATO), ‘Pay
as you go (PAYG) withholding’, ATO website, last modified 11 May 2015;
Section 16–75 of Schedule 1 to the Taxation Administration Act 1953.
[124]. Section
4AA, Crimes Act
1914.
[125]. A New Tax System
(Australian Business Number) Regulations 1999.
[126]. Subsection
26(3), A New Tax System (Australian Business Number) Act 1999.
[127]. Australian
Business Register (ABN), ‘ABN
lookup’, ABN website.
[128]. Subsection
352–5(2), Taxation Administration Act 1953.
[129]. See
for example, Commissioner of Taxation, Annual
report, 1, 2014–15, ATO, Canberra, October 2015, p. 101.
[130]. The
Treasury, Working holiday maker reform package, Fact sheet, op. cit.,
p. 2.
[131]. Section
355–25 of Schedule 1 to the Taxation Administration Act 1953. ‘Protected
information’ is defined in subsection 355–30 of the Act to cover information
that was disclosed or obtained under or for the purposes of a law that was a
taxation law, relates to the affairs of an entity and identifies, or is
reasonably capable of being used to identify, the entity.
[132]. Subsection
355–65(8), Table 7, item 5, Schedule 1 to the Taxation Administration Act
1953.
[133]. Superannuation
(Departing Australia Superannuation Payments Tax) Act 2007.
[134]. Superannuation
Guarantee (Administration) Act 1992.
[135]. Ibid.,
Subsection 19(2),.
[136]. Ibid.,
section 27(2).
[137]. Subsection
27(2), Superannuation
Guarantee (Administration) Act 1992 (as made).
[138]. Taxation Laws
Amendment (Superannuation) Act (No. 1) 2002; Income Tax
(Superannuation Payments Withholding Tax) Act 2002.
[139]. Section
5, Superannuation (Departing Australia Superannuation Payments Tax) Act 2007.
[140]. Parliamentary
Library estimates based on a 95 per cent DASP rate raising
$35 million, so that the 35 per cent and 45 per cent rates raise
about twice this amount.
[141]. See
for example, Stonecrest Cherries Tasmania, Submission
to Department of Agriculture and Water Resources, Inquiry into working
holiday maker visa review, 30 August 2016, p. 1; Tasmanian
Farmers and Graziers Association, Submission
to Department of Agriculture and Water Resources, Inquiry into working
holiday maker visa review, 2 September 2016, p. 2.
[142]. See
for example, Mansell Farms, Submission to Department of Agriculture and
Water Resources, Inquiry into working holiday maker visa review, 2016,
p. 3; National Farmers’ Federation, Submission to Department of Agriculture and
Water Resources, Inquiry into working holiday maker visa review,
1 September 2016, p. 53.
[143]. See
for example, GrainGrowers, Submission to Department of Agriculture and
Water Resources, Inquiry into working holiday maker visa review,
26 August 2016, p. 3.
[144]. See
for example, National Farmers’ Federation, Submission to Department of
Agriculture and Water Resources, op. cit., p. 53.
[145]. Deloitte
and DAWR, Independent stakeholder engagement on the working holiday maker
visa review, op. cit., p. 37.
[146]. Passenger Movement
Charge Act 1978.
[147]. Australian
Tourism Export Council, Submission,
no. 16, to the Productivity Commission, Inquiry into Service Exports,
May 2015, p. 7.
[148]. Senate
Standing Committee on Legal and Constitutional Affairs, Inquiry
into the Passenger Movement Charge Amendment Bill 2008, The Senate, Canberra,
June 2008, p. 15.
[149]. Ibid.,
p. 15.
[150]. Ibid.
[151]. K
Henry, Australia’s future tax system: report to the Treasurer, (Henry
Tax Review), ‘Part
two: detailed analysis’, vol. 2, The Treasury, Canberra, December
2009, p. 336.
[152]. Senate
Standing Committee on Legal and Constitutional Affairs, Inquiry into the
Passenger Movement Charge Amendment Bill 2008, op. cit., p. 16.
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