Australian Backpacker Tax



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What is the Backpacker Tax in Australia..

There have been many news articles recently about the new “Backpacker Tax”, but what exactly is it?

Is it really a new tax?

It is not actually a new tax, but in reality a change in definition of residency.

This is one article:

Backpackers who work during their holiday in the country currently pay no tax on income up to $18,000 but the government had planned to introduce a new tax level where they would pay 32.5% on every dollar earned from 01 July.

However, the reality is that the tax rate is still the same.

The difference is the Tax Free Threshold.


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Australian residents are allowed to earn $18,200 before they pay tax.

Non residents do not get that tax free threshold.

In the past these backpackers (working holidaymakers) have been treated as residents for tax purposes. As such they have paid no tax on the first $18,200 of the annual earnings.

The proposed change is to treat these visiting working holidaymakers as non-resident for tax purposes.

However, following complaints from the farming industries, who may lose a lot of casual workers, this residency change is being reviewed.

The ATO has a tax residency calculator at www.ato.gov.au and this, in general, says that a person is treated as tax resident if they are residing in Australia for 6 months or more.


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