Australia dumps ‘damaging’ backpacker tax as farmers warn fruit-pickers will vanish

A proposed tax on foreign travellers who work in Australia has been scrapped amid concerns from farmers about a labour drought during harvest times. The 'backpacker tax’ would have required travellers on working holiday visas to pay 32.5% on every dollar earned, when they previously paid no tax on income up to $18,000 (£9,500). But with backpackers currently making up the bulk of fruit pickers during harvest times, farmers say the change could affect their supply of “backpacker labour”.

We have therefore decided that the proposed tax arrangements require further discussions to ensure Australia does not lose market share in backpacker visitation.

Tourism minister Richard Colbeck

Backpackers have long been encouraged to work in Australia on special visas which allow them to stay for a second year if they work for three months in rural areas. They spend around AU$4.3bn (£2.3bn) every year in Australia, and concerns have been raised about the tax’s long-term impact on tourism. Farmers are already struggling to find enough workers during harvest times, and have argued that a further shortfall might see fruit simply drop off trees and rot.

backpacker tax