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Australia: Federal Court ruling on backpacker tax cautiously welcomed by industry body

AUSVEG, Australian industry body for the vegetable industry, has urged workers to review and confirm their residency status following the Federal Court’s decision that the backpacker tax cannot be applied to citizens of eight countries who are Australian residents.

The decision applies to Working Holiday Makers from the United Kingdom, the United States, Germany, Finland, Chile, Japan, Norway, and Turkey who are Australian residents for taxation purposes.

AUSVEG CEO James Whiteside said that while the decision could have some positive implications for workers in the horticulture industry, it was important to note that this decision did not apply to all backpackers.

“This decision will affect people from these eight countries who are on Working Holiday Making visas who are Australian residents for taxation purposes, so it is important for these workers and their employers to review their residency status to determine whether this affects them,” said Mr Whiteside.

The backpacker tax has been a vexatious issue for the industry since it was implemented in 2016.

At the time industry argued that a backpacker tax, which was originally set to be at 32.5 per cent but settled at 15 per cent, would deter backpackers from entering the country and heavily impact Australian vegetable and potato growers.

In 2012-13, Australia had more than 258,000 Working Holiday Makers enter the country on 417 and 462 visas – now that figure is down to just over 209,000.

“AUSVEG, along with other horticultural associations, advocated strongly that the backpacker tax would adversely affect the number of backpackers who came to work on Australian farms, which are a vital part of the workforce puzzle for Australia’s horticulture industry,” Mr Whiteside said.

“This has proven to be the case and it is extremely disappointing that this latest ruling will only add more confusion. The debate around the backpacker tax was highly damaging to the industry, as growers were held to ransom by political games and our reputation as a desirable destination for backpackers was tarnished.”

“The implications on this ruling on growers in our industry are uncertain at this stage. We strongly recommend that workers review their residency statuses with their employers and confirm whether this ruling affects them.”

AUSVEG is wary that if this ruling is misinterpreted by growers or backpackers it could cause significant confusion in the industry, which relies heavily on backpackers to harvest and supply fresh fruits and vegetables to local and international consumers.

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