Confusion remains over backpacker tax

Despite announcing a six-month deferral of the 32.5 per cent rate during the federal election out to January 1 next year at a $40 million budget cost - and signing off on a 15pc rate in a deal with the Australian Greens during the final sitting week of federal parliament for 2016 - the National Farmers’ Federation (NFF) says its perplexed by the government’s actual formal position.

The NFF’s bewilderment remains, despite media comments by Treasurer Scott Morrison over the past two days.

Acting NFF CEO Sarah McKinnon said the national peak farm body was calling on the government to immediately clarify the Australian Taxation Office’s (ATO) approach to taxing working holiday-makers, until 31 December 2016.

“Just when we thought the backpacker tax debacle had been put to bed it seems the government refuses to let it die,” she said.

“We are asking the Treasurer to confirm that backpackers will not be subject to the 32.5pc tax rate during this period, as the government committed to in the lead up to the election.

“If the ATO will in fact move to apply the 32.5pc for the period before 1 January 2017, it is fair to say that Australian farmers and the backpackers who support them have been misled.

“We await with anticipation a prompt clarification from the Treasurer.”

The NFF’s call came after Mr Morrison was asked repeated questions on whether the applicable tax rate on backpackers was 15pc or not during media conferences.

Yesterday, Mr Morrison said “The backpacker tax kicks in at 15pc - that’s what it should be at”.

“Obviously the government pursued other alternatives but Labor played politics with this issue and that issue is now settled and I don’t plan to return to it,” he said.

Today, Mr Morrison said the legal position up until January 1 next year, “and this is why it was important to legislate this matter before we left the parliament”, was the non-resident tax rate, set by former Labor Treasurer Wayne Swan, at 32.5pc

He said that tax rate “technically applies” until a new tax rate is legislated specifically for working holiday makers “which is what we were able to achieve”.

“That takes place and commences on 1 January,” he said.

“What that means is the withholding rate for businesses would be 15pc from that day on.

“Prior to that, it was a matter of whether backpackers declared themselves as a resident or non-resident for tax purposes and that would determine how the employer would have dealt with that issue.”

Mr Morrison said the backpacker tax had been a “technical issue” and a “vexed issue”.

“We got resolution to that before we left parliament…we were pleased to get that outcome,” he said.

Mr Morrison said he’d “consistently” stated that the non-resident tax rate at 32.5 cents applied until a rate was legislated at a different level.

“That has been the rule,” he said.

“(On) 1 January next year, the 15pc legislated rate comes into effect.

“I am pleased we were able to get an outcome.

“I am appalled at the way that the Labor Party played rank, wrecker politics which is what we see from them every single day.”

But Labor Shadow Agriculture attacked the government over its mixed messages on the tax rate, at farmers’ expense.

Mr Fitzgibbon said during the federal election campaign the government promised farmers the backpacker tax would be deferred from July 1, 2016 to January 1, 2017.

But he said then on June 10, 2016, the ATO website was still directing accountants to advise farmers to collect 32.5pc.

The government quickly directed the website advice be taken down, suggesting it was an error, he said

But Mr Fitzgibbon said recent reports suggested the ATO was advising farmers that backpackers - who have worked since July 1 and continue to work up to January 1 - were subject to the 32.5pc tax rate.

“The nightmare continues for our farmers,” he said.

Mr Morrison’s office has been contacted for further clarification.

Several Coalition rural MPs were contacted for comment but unaware of the latest development, on the backpacker tax.