17 May 2016

Delay likely to kill Aussie backpacker tax

3:51 pm on 17 May 2016

Australia's government has deferred a proposal to tax backpackers, in a move the country's Labor party says has effectively killed it.

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Photo: RNZ/ Tom Furley

Assistant Treasurer Kelly O'Dwyer announced today the proposed tax would be delayed by six months.

Under the tax, backpackers on working holidays would have been taxed at a rate of 32.5 percent tax on all earnings from July 1.

All workers in Australia currently only pay tax on declared earnings above $A18,200.

The plan had come under fire from Australia's agricultural sector, as well as backpackers themselves, over fears it would drive a large portion of seasonal labourers to other countries such as New Zealand.

"We will look at enacting any of the outcomes made from that review from 1 January, 2017," Ms O'Dwyer said at a press conference in Murrumbateman, a wine grape region just outside Canberra.

But one Liberal MP said it was more likely to be a year-long delay, which would effectively "kill it".

Nationals and some rural Liberal MPs have lobbied for the proposed 32.5 per cent tax rate to be lowered, although most agree that backpackers should be forced to pay some level of tax.

The Deputy Prime Minister and Nationals leader Barnaby Joyce said it was a good outcome for regional Australia.

"I'm just very happy that today we have got a further extension so we can continue on attracting season workers to Australia to 1 January to give us enough time to get to a longer-term solution," he said.

"I've been in negotiations with the Liberal party and Mr Morrison and Mr Turnbull, people have heard my commentary on this. I've been vitally aware of concerns in the industry and I gave a commitment we've have a resolution on this issue."

But the farm sector said the outcome was not ideal, National Farmers' Federation chief executive Tony Mahar saying putting the decision off for six months "doesn't help anyone".

"If it is bad policy it shouldn't be there," he said.

-ABC