Business would be rendered unviable by Backpacker Tax

The National Farmers’ Federation (NFF) has implored Government to restore certainty to thousands of primary producers and to save farm businesses across Australia by eliminating the proposed ‘backpacker tax’ in this week’s Federal Budget.
The tax would see all working holiday makers taxed as non-residents at a rate of 32.5 per cent on all income from 1 July 2016 and has evoked widespread condemnation from the agriculture, tourism and transport industries as well as rural and regional communities. An online petition asking Government to scrap the tax has now attracted more than 30,000 signatures from across the globe.
Northern Territory melon growers, Dave and Ruth Cormack, who pay a small army of working holiday makers more than $1000 each a week during harvest time, between July and October, said their business would be rendered virtually unviable by the acute shortage of backpacker labour the tax would trigger.
“What the Government is failing to see here is that they will most certainly chase backpackers away from Australia,” Mr Cormack said.
“Sure, they may not pay a large amount of tax while they’re here but they are making an enormous contribution to the economy by spending the money they do make in our local communities.
“Given we have absolutely no certainty around being able to access backpacker labour we are unsure as to whether to even plant a crop this year – this is how dire this situation is.”
Mr Cormack said the seasonality of his labour requirements made the work unsuitable for many Australians who required more regular employment and that any increase in costs associated with securing a backpacker alternative would cripple his business.
“Last year our revenue was around $2 million which sounds like a lot but take our transport expenses of $676,000, employment costs of around $420,000 and planting costs of $500,000,” he said.
“By the time you also take our depreciation and other expenses my wife and I are working for around $100,000 a year between us.
“You can see that any increase in costs, which would be the case if we did not have access to backpackers, would lead to serious trouble.”
NFF President, Brent Finlay, said it was time for Government to put to an end to what would be long-term hurt for thousands of agricultural businesses, farming families and rural and regional communities.
“This has now reached the point of being ridiculous,” Mr Finlay said.
“To increase revenue through the implementation of the tax, by what has been predicted to be $540 million in the forward estimates, is completely counter-productive when set against the risk of decimated the revenue generated by backpackers and their contribution to a range of Australian industries,” Mr Finlay said.
“The NFF agrees backpackers should pay tax but the rate of 32.5 per cent is too high.
“Instead, we have advocated for a rate of 19 per cent, achieved through the deactivation of the tax-free threshold, which would be fairer to backpackers themselves and to the industries which rely upon them for seasonal labour requirements.
“Common sense needs to prevail here and the interests of our farmers and regional communities protected.
“We implore the Treasurer and Government to put an end to the backpacker tax and to install a practical solution that truly promotes the growth and prosperity of the Australian economy.”