If you worked in any of these countries, you could be due a Tax Refund

Working Holidaymakers Lose Tax-Free Threshold

From July 2016, working holidaymakers in Australia will be paying higher income tax due to the loss of the tax-free threshold announced in Budget 2015.

Under the new tax residency rules, they'll pay taxes on every dollar earned, instead of their first $18,200 being tax-free as is currently the case.

Currently, working holidaymakers can generally be treated as residents for tax purposes if they're in Australia for more than 6 months, and can subsequently avail of the tax-free threshold and low income tax offset (LITO). This means they pay the lower tax rate of 19c on the dollar for income up to $37,000.

When the changes come into effect, people in Australia who are deemed non-residents for tax purposes will pay 32.5c tax on every dollar earned up to $80,000.

It is estimated that this will net the Australian Government an additional $540 million over the next four years. It will have a big impact on the agricultural sector, which relies heavily on hiring backpackers for low-skilled, seasonal work like fruit picking. 

The full impact of these changes on backpackers remains to be seen. We'll bring you more news and analysis on this as it emerges.

Read a full summary of how Budget 2015 will affect Australian taxpayers here

The average tax refund Down Under is AU$2600


About The Author

Ciara Kennedy - Digital Content Writer @ Taxback.com

Ciara is our Digital Content Writer at Taxback.com. Since graduating in Journalism and Visual media, Ciara has worked in online marketing in Ireland and Australia and loves writing in all its forms.

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