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Full response from a spokesperson for Barnaby Joyce

  • Written by: Lucinda Beaman, Deputy Editor, FactCheck, The Conversation

In relation to this FactCheck on how much working holiday makers would earn in Australia compared to New Zealand, England or Canada, a spokesperson for Barnaby Joyce said:

Under the proposed 19% tax rate backpackers coming to Australia will have a better take home pay than those who choose to work in New Zealand, England or Canada.

Based on typical working holiday working around 800 hours during a year at the relevant minimum wage, adjusting for market exchange rates, a backpacker who comes to Australia will earn $2,274 more in net income than a backpacker working in Canada, $1,484 more than a backpacker in New Zealand and $913 more than a backpacker in the UK.

The Department of Agriculture and Water Resources submission to the recent Senate Inquiry has the international comparison table that includes Australia at both the 32.5% and 19% rates.

image International comparison of tax paid and net income, average per working holiday maker (PPP means the purchasing power parity adjusted exchange rate). WHM stands for working holiday maker. Department of Agriculture and Water Resources

The department’s submission is #23 and the table is at the bottom of page 13.

The international comparisons draw on publicly available material from Government websites and the World Bank. For Canada, minimum wages can vary between provinces. The international comparison assumes the minimum wage for Ontario, which is higher than other provinces such as British Columbia. As requested, these sources are outlined in the table below:

image International comparisons of minimum wages. Office of Barnaby Joyce, Author provided

The comparison assumes backpackers in Canada and the United Kingdom are taxed as residents, that is, they can access the tax-free threshold or its equivalent.

This is likely to be a generous assumption for some working holiday makers, in practice, non-residents in Canada may only claim the ‘basic personal amount’ (Canada’s equivalent of the tax-free threshold) if all or substantially all (that is 90%) of their income for the year is included in their taxable income in Canada.

The residency of backpackers in New Zealand is irrelevant for this comparison as there is no tax free threshold for residents or non-residents.

Labor’s proposed 10.5% tax rate would seriously disadvantage Australian workers, who could be taxed 150% as much as a foreign worker working the same hours at the same wage, based on earning $950 a week.

Example:

Sarah Jones is an Australian fruit picker who spends long days in orchards picking, pruning, irrigating and carrying out farm maintenance. She earns $45,000 per year pre-tax.

French backpacker Jean Dupont has come to Australia on a working holiday maker visa. He works for ten weeks during the picking season, alongside Sarah, picking at the same rate.

Same amount of fruit picked, same wages paid.

Under Labor’s proposed tax on working holiday makers, Jean will pay 10.5% in tax while Sarah will pay 15% over the ten week period.

Authors: Lucinda Beaman, Deputy Editor, FactCheck, The Conversation

Read more http://theconversation.com/full-response-from-a-spokesperson-for-barnaby-joyce-69414

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