Senate debates

Thursday, 24 November 2016


Income Tax Rates Amendment (Working Holiday Maker Reform) Bill 2016, Treasury Laws Amendment (Working Holiday Maker Reform) Bill 2016, Superannuation (Departing Australia Superannuation Payments Tax) Amendment Bill 2016; In Committee

12:55 pm

Photo of Peter Whish-WilsonPeter Whish-Wilson (Tasmania, Australian Greens) Share this | Hansard source

Senator Cormann, you just said, 'This is going to be my last contribution.' I certainly hope that is not the case, because we have got to nowhere near the bottom of this yet. In your budget papers for 2015-16 you said:

Currently, a working holiday maker can be treated as a resident for tax purposes if they satisfy the tax residency rules, typically that they are in Australia for more than six months. This means they are able to access resident tax treatment, including the tax-free threshold, the low income tax offset (LITO) and the lower tax rate of 19 per cent for income above the tax free threshold up to $37,000.

Now, I understand that the AAT made a ruling on three cases, out of hundreds of thousands of backpackers who have come to this country. I also understand, from asking the ATO and Treasury myself during the Senate inquiry, that they do not actually have information on how many backpackers are currently residents for tax purposes and how many are not residents for tax purposes. I very clearly asked them to clarify whether it is technically correct of you and the Nationals and the farmers groups, out there championing your cause, to be claiming that the default position for all backpackers in this country is going to be 32.5 per cent. The clear answer was no, that is not the default position. Some backpackers in this country are legally entitled to have the same tax residency as Australians. It is black and white. They can go onto the ATO's website. There is a list of things there that they need to comply with.

I just wanted to clear up for anyone listening and for the Hansard record that this implication that has been put forward—and I would call it spin and BS—and that has been played out in this debate in recent weeks, including here in the last couple of days, and which is designed to frighten senators, MPs and farmers groups into accepting 19 per cent , is rubbish. I would like to know, from the ATO, what kind of work they have done in recent years on actually determining how many backpackers are residents for tax purposes and how many are not, and how many should be residents for tax purposes and how many should not. You said that 'invariably'—or some word to that effect—they are not. But my understanding is that there is no data on that.

I would also like to know, if this is the case, and Senator Leyonhjelm raised this in his speech, how it is possible, if the default rate is 32½ per cent and that is the rate they should be paying, that in your own budget—unless you have some sort of Enron-style accounting or you are a financial alchemist and can create money out of nothing—that a tax cut can create revenue in your budget. Could you address those two questions?


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