Australian tax reforms mean you’re going to lose A LOT of money…
For many young people, the Australian Working Holiday Visa is a rite of passage. It’s an opportunity to venture out into the world and earn a few bob whilst soaking up the sun and meeting new people.
Some people return home, some apply for a second Working Holiday Visa and some are offered sponsorship by an Australian employer.
One thing that most Working Holiday Makers have in common – until now – is benefiting from a generous annual tax-free threshold of $18,200.
But all that’s about to change…
Tax Time Bomb
As of July 2016, ALL Working Holiday Makers will be taxed as non-residents. Backpackers will pay 32.5% tax from the first dollar they earn, kissing goodbye to a third of their wages.
This is a devastating blow for Working Holiday Makers, many of whom take casual hospitality roles on low rates of pay.
Most Working Holiday Makers were previously able to benefit from the tax-free threshold because they lived continuously in Australia for several months and were classed as residents by the Australian Tax Office.
A backpacker making $40,000 a year currently pays around $4,537 in income tax. As of July 2016, they’ll pay $13,000. It doesn’t take a mathematical genius to work out that this is not good news…
$8,500 can pay for a lot of beer and several holidays! It’s better off in your pocket.
What Can You Do?
If you’re going to be on a Working Holiday Visa in July 2016 – and don’t feel like giving a third of your income to the Australian taxman – you need to look at other visa options.
You may be eligible for an independent permanent residency visa, a partner visa or an employer sponsored visa. Although these visas are more expensive to apply for, you’ll save thousands of dollars in the long-run, especially if you’ve got a partner and can both be included on the same application.
Don’t Waste Time
Employer sponsored visas, partner visas and independent visas take time to prepare for and to process. You need to plan ahead and get the ball rolling as soon as possible. An Australian PR visa could involve a skill assessment, State nomination or approval from a Regional Certifying Board – all of which take time. Don’t think you can apply for a PR visa in June and have it granted by July, unfortunately it’s not as easy as that.
Temporary employer sponsored visas like the Subclass 457 Visa are quicker to process, but they still involve a considerable amount of groundwork.
Our advice is this – don’t bury your head in the sand and wait until July 2016. Take the visa bull by the horns now and explore your options. The end of the year isn’t far away, it’s time to start planning ahead.
For a free consultation with an Australian migration expert – call today on 08 6189 5333 or 03 9038 9070.