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
Firstly, the cases that went before the Administrative Appeals Tribunal, as often is the case in relation to the interpretation of tax laws, were test cases. My advice is that they have clarified the accurate interpretation of the law, and the statement that the tax commissioner put out on 2 November 2016 could not be more clear. We considered that most working holiday-makers are nonresidents due to their working and holidaying while in Australia. As such, the expectation would be that most holiday-makers, if this law is not passed in the form that the government is putting forward, will end up paying 32.5 per cent tax from the first dollar earned. We are proposing to make that 19 per cent.
The senator asked about data. The reality with the tax office is that the ATO is very much backward looking. You are quite right, Senator Whish-Wilson: in the end it does come down to individual circumstances. If somebody comes to Australia on a working holiday, so called, and properly settles in a particular way and makes Australia their residence for residency purposes and is not using the usual pattern of a working holiday-maker with their residence overseas, then there will be different circumstances. On 2 November the tax office made it very clear, again, that it considers that most working holiday-makers are nonresidents but due to their pattern of working and holidaying while in Australia they would be liable to pay the 32.5 per cent tax from the first dollar of income earned in Australia.