According to CA ANZ’s submission to the government, the classification of backpackers as Australian residents for tax purposes is too generous, while non-resident rates of taxation are too high.
“Classifying backpackers as non-residents and imposing a 32.5% rate on the first $80,000 of earnings makes Australia uncompetitive compared to other countries, including New Zealand, in key industry sectors such as horticulture and tourism,” CA ANZ said.
“A concessional, easy to comply with tax regime is warranted for backpackers, using learnings from Australia’s tax treatment of participants in the seasonal labour mobility program and other countries.”
CA ANZ head of tax policy Michael Croker said there should be more time allocated to the review so that government officials could build an effective, multi-agency approach using a platform such as single-touch payroll.
“This would involve a worker-tracking strategy that helps employers and labour hire companies comply with their tax, Fair Work and other obligations,” Mr Croker said.
While legislation to introduce single-touch payroll is currently being review by Parliament, CA ANZ said employers require more time to learn about the system.
CA ANZ proposed that travellers be issued with TFNs and myTax accounts on arrival, making all their details available via the electronic search facility on single-touch payroll.
Such a system would stop foreign workers misrepresenting themselves as being in possession of an ABN, according to the association.