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Potential changes to Working Holiday Visa program

Written By John Unger
Fri, Nov 4, 2016
John Unger

Potential changes to the Working Holiday Visa program have been flagged and will be beneficial to people applying for working holiday visas and will also benefit those already in Australia on working holiday visas.

The Government is considering options for expanding the upper age of eligibility from 30 to 35 years, including time frames, legislative requirements and engagement with partner countries. Reciprocity of arrangements for Australian citizens remains a key feature of the programme. The current age of eligibility (18 to 30) will remain in place for the time being.

In a press conference, The Hon Scott Morrison MP, Treasurer of the Commonwealth of Australia has said “The changes are as follows, from January 1 of this year the Government will set the tax rate applying to working holiday makers at 19 per cent on earnings up to $37,000, rather than the 32.5 per cent announced in the 15/16 Budget, with ordinary marginal tax rates applying beyond that point.”

“The Government will also reduce the visa application charge for working holiday makers by $50 to $390.”

“We will also be making some changes to the 417/462 visas to improve the supply of working holiday makers at this current time, and to improve its attractiveness, as a visa, for people to come on holiday to Australia. This will include two things – the first is to extend the age of eligibility from 30 to 35, and to change the same employer test to say that someone can work for the same employer for 12 months, but no more than six months in the one location.”

The full transcript of the press conference can be found here.

In summary, the potential changes are as follows:

Age Limit Increase
To be eligible under the current program you must be under 31 years of age. An increase in the age limit will open up the program significantly.
Note: The Assistant Minister’s office has advised the Migration Institute of Australia that there are many complexities involved in implementing these changes and no commencement date for the age increase from 30 to 35 has been agreed upon.

Change to Work Rights
Currently, working holiday visa holders cannot work for more than six months with the same employer. More flexible arrangements, allowing an employer with multiple sites in different locations to retain employees for up to 12 months, providing the second six months is in a different location.

Reduction in Application Fees

The current application fees are $440. The new application fees will be $390, a $50 saving.

Tax Changes
The tax rate on working holiday makers with income less than $37,000 will be 19%, a reduction from the current rate of 32.5%. The usual marginal tax rate will apply for income over $37,000.  Employers will need to register with ATO as an employer of working holiday makers for the lower rate to be applicable. This register of employers will be public. It is intended to both tighten the integrity of the tax system and provide an incentive for employers to comply with obligations as the Government can cancel the employer’s registration should they not “do the right thing by those guests to our country who are in their employ.”

In order to pay for the changes, totaling up to $350 million, the tax on working holiday makers’ superannuation when they leave Australia will be increased to 95% from 1 July 2017. This effectively means working holiday makers will forfeit their superannuation on departing Australia.

Other points to note
Tourism Australia will be provided with $10 million over the next two years to engage in a backpacker tourism promotion to promote a backpacker holiday experience in Australia.

If you would like to discuss any of these changes and how they may affect you, please contact TSS Immigration.

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