January 1, 2017

Farmers urged to register for backpacker tax rate or risk having to withhold higher rate

Farmers and labour contractors that employ backpackers are being urged to register with the Australian Tax Office (ATO) to take advantage of the new tax rate.

The new arrangements for tax and superannuation for working holiday visa holders, including a 15 per cent tax rate, started on January 1.

But Rachel Mackenzie, from horticulture lobby group Growcom, said while the Federal Government had resolved the politics of the issue, it still needed to do more to educate employers.

"I am a little concerned that there has been a lack of clear information coming out by government to growers," she said.

"Prior to Christmas, it was a complete mess with the ATO website being down and it was almost impossible to get a clear answer."

Farmers and labour hire contractors have until January 31 to register with the ATO to apply the new rate, otherwise they will have to withhold the full 32.5 per cent foreign resident tax rate.

Ms Mackenzie said while the registration form was now working, some farmers might not be aware of their obligations.

"I do think government needs to be a bit more proactive in this space and really push the information out through every possible channel," she said.

"Not just farmers, but labour hire companies and people who own cafes, anyone who employs a working holiday maker has to register."

"But I certainly don't think it is our sole responsibility to push that information out."

Ms Mackenzie said she hoped the registration process might go some way to helping address worker exploitation.

"It certainly means that we have an understanding of who is employing working holiday makers and they are a vulnerable sector of our employee workforce," she said.

"Unfortunately a lot of the dodgy labour hire companies, they're not really working in the tax system so it may not help in that regard but it does give some form of check."

Backpacker questions remain unanswered

Maree Loader, who manages Delta Backpackers in Ayr in north Queensland, said there had been little done to clear up confusion and little support through the transition.

"There's been a lot of misinformation so I've had backpackers telling me everything from that they're going to pay full tax, that they can't claim any tax back, that they can't get their superannuation back," she said.

"I've had people tell me 'oh, we don't need to do harvest work anymore [for a second year visa] ... I can just come to Australia for two years'.

"Some of these things were extremely concerning for us as a business but I'm sure as well for them [backpackers] extremely concerning because for a lot of them it's their major income while they're travelling in Australia.

"There's not a lot of information ... I've been Googling and I can't find certain information, I'm not able to understand how they're going to roll this out."

The hostel is also a labour hire contractor, and Ms Loader says it has been difficult to communicate with her guests about the changes.

"I was doing a lot of Googling and I just found it so incredibly difficult to find the information," she said.

"I've even printed some of the parliamentary extracts to try and understand what's happening and I couldn't."

But she said overall the resolution of the tax issue did bring her more confidence heading into the new year.

"[I'm] a lot more comfortable, I think 15 per cent is quite reasonable," she said.

"Honestly I was starting to really fear for this business ... I definitely need to get online to see what's happening.

"I'm hoping now that it's in there might be a bit clearer guidance available because there hasn't been up to this point."

The ABC contacted the federal agriculture and treasury departments for comment.

Impact of changes unknown

The National Farmers Federation (NFF) says it will not know until the end of this picking season how growers have fared under the new tax legislation.

The NFF's Sarah McKinnon said the lobby group would have to wait until federal government bodies release the information, which may not come until the middle of the year.

"In some places there hasn't been a problem while in other places they have.

"But because of the season itself a lot peoples labour needs have been pushed back to a later harvest.

"So that's actually quite useful in a way, and we hope that it means it will allow backpackers time to settle into the new regime and their alarm will subside."

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