Australian ‘backpacker tax’ to hit Irish travellers from July 2016

(Last Updated On: January 12, 2016)

The date is getting closer and closer. The new ‘backpacker tax’ as many are calling it.

This will mean that if you earn for example AU$10’000 you will have to fork out AU$3250 to the tax man

This doesn’t just affect Irish backpackers but also British and other foreign citizens. 

Australia backpacker tax coming in July 2016

This will mean that if you earn for example AU$10’000 you will have to fork out AU$3250 to the tax man


Remember that form you filled out when starting a new job “I am not a resident for tax purposes?”

Previously or currently,(whichever way you look at it) backpackers on working holidays in Australia share the same personal tax-free allowance given to Australian citizens, meaning they pay no tax on earnings up to AU$18,200, and pay 19pc tax on income above that up to AU$37,000.

On income between AU$37,001 and AU$80,000, they incur a 32.5pc tax charge.

But from July 1 2016, foreign workers will be considered as non-residents for tax purposes, meaning they will have to pay tax at 32.5pc on every dollar they earn up to AU$80,000.

The Australian Taxation Office (ATO) describes an Australian resident as someone who has always lived in Australia or is moving to Australia to live permanently. 

An Australian travelling overseas temporarily but who has not set up a permanent home in another country, an overseas student who has come to Australia to study and has enrolled in a course that is more than six months long.

Someone who has been in Australia continuously for six months or more, and for most of that time they have worked in one job and lived at the same place.

A person who has been in Australia for more than half of the financial year, unless their usual home is overseas and they do not intend to live in Australia.

Anyone who falls outside these guidelines are likely to be classed as a non-resident for tax purposes.

Chas Roy-Chowdhury, head of taxation at the ACCA (Association of Chartered Certified Accountants), said the Australian government was penalising foreign workers because they were a “soft target”. “These new tax charges are a huge increase for people who are already on low incomes and are merely working to fund their travels whilst overseas,” he said.

“A significant number of people will be affected, and once people begin to realise how much tax they will be charged when working in Australia, they might have second thoughts about going,” Mr Roy-Chowdhury added.

“This is really the wrong way to go if the government wants to discourage workers from evading tax. Tax evasion in Australia is currently as high as 15pc, compared to less than 5pc in the UK.” Source: Yahoo Finance

This effects many of you reading this, what are your thoughts on this? Comment below: 

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