House of Representatives

Explanatory Memorandum

(Circulated by authority of the Treasurer, the Hon Scott Morrison MP and the Assistant Minister for Immigration and Border Protection the Hon Alex Hawke MP)

Chapter 1 Working holiday maker reform package

Outline of chapter

1.1 The 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 and Passenger Movement Charge Amendment Bill 2016 (the Bills) reform tax and other arrangements for working holiday makers.

1.2 A working holiday maker is an individual who holds a Subclass 417 (Working Holiday) visa, a Subclass 462 (Work and Holiday) visa or certain related bridging visas.

1.3 The Bills:

•

apply a 19 per cent income tax rate to working holiday maker taxable income (that is assessable income derived from Australian sources by working holiday makers less relevant deductions) on amounts up to $37,000, with ordinary tax rates for taxable income exceeding this amount;

•

help protect working holiday makers from unfair employment arrangements by allowing the Commissioner of Taxation (Commissioner) to disclose information that is relevant to ensuring an entity's compliance with the Fair Work Act 2009 to the Fair Work Ombudsman;

•

require employers of working holiday makers to register with the Commissioner, which will allow such employers to withhold tax at income tax rates applying to working holiday makers;

•

require the Commissioner to give the Treasurer, for presentation to the Parliament, a report on working holiday makers, which includes statistics and information derived from the register;

•

increase the rate of the departing Australia superannuation payments tax to 95 per cent for working holiday makers;

•

reduce the visa application charge for Subclass 417 (Working Holiday) visas and Subclass 462 (Work and Holiday) visas from $440 to $390; and

•

increase the passenger movement charge from $55 to $60.

Context of amendments

1.4 Working holiday makers are an important source of Australia's international tourism and a key source of seasonal labour in regional areas, particularly in the agriculture, horticulture, tourism and hospitality sectors. The reforms recognise the important contribution of working holiday makers to the Australian economy. The reforms seek to increase Australia's attractiveness as a destination of choice for working holiday makers, whilst ensuring that they pay tax at a fair rate on their earnings in Australia.

Income tax rates applying to working holiday makers

1.5 Currently, working holiday makers who satisfy the tax residency criteria receive the benefit of the $18,200 tax-free threshold. In contrast, working holiday makers that are non-residents for tax purposes are taxed at 32.5 per cent from their first dollar of income. The non-resident income tax rates that currently apply to the taxable income of working holiday makers are:

Table 1.1 : non-resident income tax rates

*Subject to passage of legislation before Parliament, the $80,000 threshold will be raised to $87,000. The above rates do not include the Temporary Budget Repair Levy - for 2016-17 this levy is payable at a rate of 2 per cent for taxable incomes over $180,000.

Departing Australia superannuation payments tax

1.6 The departing Australia superannuation payments tax applies to the superannuation balance paid to eligible temporary visa holders (including holders of Subclass 417 (Working Holiday) visas and Subclass 462 (Work and Holiday) visas) where the individual has left Australia and their visa has expired or is cancelled.

1.7 Currently, the rate of the departing Australia superannuation payments tax is:

•

nil for the tax free component of the payment;

•

38 per cent for the element taxed in the fund of the taxable component of the payment;

•

47 per cent for the element untaxed in the fund of the taxable component of the payment;

•

47 per cent for the amount of the element that is not an excess untaxed roll-over amount; and

•

nil for the amount of the element that is an excess untaxed roll-over amount.

PAYG Withholding

Withholding obligations and registration for withholding

1.8 Under Pay-As-You-Go Withholding (PAYG Withholding), amounts are collected in respect of particular kinds of payments or transactions. Usually, someone who makes a payment to a recipient is required to withhold an amount (section 16-5 Schedule 1 to the Taxation Administration Act 1953 (TAA 1953)) and at a later date remit these amounts to the Commissioner. Division 12 of Part 2-5 of Schedule 1 to the TAA 1953 contains payments from which amounts must be withheld, known as 'withholding payments' (section 10-5 of Schedule 1 to the TAA 1953 contains a summary table of withholding payments). Payers of withholding payments are currently required to register with the Commissioner (refer section 16-140 of Schedule 1 to the TAA 1953).

1.9 Employers of working holiday makers make a number of payments to working holiday maker employees which are withholding payments. These employers are subject to withholding obligations and are required to register for PAYG Withholding.

Working out how much to withhold

1.10 The Commissioner has the power to make withholding schedules, which allow the Commissioner to provide for different rates of income tax to be withheld. Section 15-30 of Schedule 1 of the TAA 1953 specifies the matters to be considered when the Commissioner exercises the power to make withholding schedules. The Commissioner also has the power to undertake enforcement action to ensure that employers withhold and remit the correct amounts.

Commissioner can provide limited information to the Fair Work Ombudsman

1.11 The Commissioner can currently only disclose to the Fair Work Ombudsman the fact that an entity has actual or reasonably suspected non-compliance with a taxation law. Due to the restrictions imposed by the secrecy provisions in Schedule 1 to the TAA 1953, the Commissioner is unable to disclose a wider range of information to the Fair Work Ombudsman for the purpose of ensuring an entity complies with the Fair Work Act 2009.

No reporting on working holiday makers by the Commissioner to the Treasurer

1.12 Certain information on working holiday makers, such as the number of working holiday makers who work while in Australia, the employers they work for and the regions in which the employers are located, is currently not reported.

Rate of visa and passenger movement charges

1.13 Currently, the application fee for Subclass 417 (Working Holiday) visas and Subclass 462 (Work and Holiday) visas is $440.

1.14 The passenger movement charge is $55 for non-exempt passengers.

Summary of new law

Tax rate changes

1.15 The Income Tax Rates Amendment (Working Holiday Maker Reform) Bill 2016 provides for an income tax rate of 19 per cent for taxable income up to $37,000 of working holiday makers in a year of income. Income above this amount in a year of income is subject to ordinary marginal income tax rates.

1.16 The Superannuation (Departing Australia Superannuation Payments) Bill 2016 increases the rate of the departing Australia superannuation payments tax to 95 per cent for those components of the payment that are currently subject to the tax.

Registration of working holiday maker employers, protection of working holiday makers and periodic reporting by the Commissioner

1.17 The Treasury Laws Amendment (Working Holiday Reform) Bill 2016 sets up a framework requiring employers of working holiday makers to register with the Commissioner. Registered employers may apply reduced rates of PAYG Withholding to withholding payments made to working holiday makers.

1.18 The framework allows the Commissioner to cancel the registration of an employer in certain circumstances, including where the Commissioner is satisfied that the employer is not a fit and proper person.

1.19 The date on which an entity's registration or cancellation of registration takes effect will be made publicly available on the Australian Business Register.

1.20 The Commissioner is required to provide to the Treasurer an annual report, for presentation to the Parliament, on the taxation of working holiday makers and the registration of their employers, including on statistics and information derived from the register.

1.21 The information the Commissioner can disclose to the Fair Work Ombudsman without breaching secrecy provisions in Schedule 1 to the TAA 1953 is expanded to allow the Commissioner to disclose information that is relevant to ensuring an entity's compliance with the provisions of the Fair Work Act 2009.

Visa and passenger movement charge changes

1.22 The Treasury Laws Amendment (Working Holiday Reform) Bill 2016 and the Passenger Movement Charge Amendment Bill 2016:

•

reduce the visa application charge for Subclass 417 (Working Holiday) visas and Subclass 462 (Work and Holiday) visas from $440 to $390; and

•

increase the rate of the passenger movement charge from $55 to $60.

Comparison of key features of new law and current law

Detailed explanation of new law

Lower working holiday maker income tax rate

1.23 The Income Tax Rates Amendment (Working Holiday Maker Reform) Bill 2016 amends the income tax rates that apply to working holiday maker taxable income. Working holiday maker taxable income is assessable income derived from sources in Australia by working holiday makers, less related deductions. [Income Tax Rates Amendment (Working Holiday Maker Reform) Bill 2016, item 2, subsection 3A(2) of the Income Tax Rates Act 1986]

1.24 A working holiday maker is an individual holding one of the following temporary visas:

•

subclass 417 (Working Holiday) visa; or

•

subclass 462 (Work and Holiday) visa.

[Income Tax Rates Amendment (Working Holiday Maker Reform) Bill 2016, items 1 and 2, subsection 3(1) and subsection 3A(1) of the Income Tax Rates Act 1986]

1.25 A working holiday maker may also be an individual who holds a bridging visa permitting the individual to work in Australia if:

•

the bridging visa was granted under the Migration Act 1958 in relation to an application for one of the visas referred to above;

•

the Immigration Minister's decision on that application is yet to be made; and

•

the most recent visa, other than a bridging visa, held by the individual was a Subclass 417 (Working Holiday) visa or Subclass 462 (Work and Holiday) visa.

[Income Tax Rates Amendment (Working Holiday Maker Reform) Bill 2016, items 1 and 2, subsection 3(1) and subsection 3A(1) of the Income Tax Rates Act 1986]

1.26 The amendments ensure working holiday maker taxable income is subject to income tax at the following rates:

Table 1.2 : Income tax rates applying to working holiday taxable income

*Subject to passage of legislation before Parliament, the $80,000 threshold will be raised to $87,000. The above rates do not include the Temporary Budget Repair Levy - for 2016-17 this levy is payable at a rate of 2 per cent for taxable incomes over $180,000.

[Income Tax Rates Amendment (Working Holiday Maker Reform) Bill 2016, items 2 and 7, subsections 3A(2) and Part III of Schedule 7 to the Income Tax Rates Act 1986]

1.27 A working holiday maker's working holiday taxable income is reduced by related deductions before applying the income tax rate. [Income Tax Rates Amendment (Working Holiday Maker Reform) Bill 2016, item 2, subsection 3A(2) of the Income Tax Rates Act 1986]

Example 1.1 : Working holiday maker taxable income

Pierre is a non-resident for income tax purposes. He is a working holiday maker for the whole of the 2017-18 income year earning $75,000 for the income year.

Pierre pays tax at the rate of 19 per cent for the first $37,000 and 32.5 per cent for the remaining $38,000 comprising his working holiday taxable income which exceeds the first income tax bracket.

1.28 Working holiday makers may earn income other than employment income whilst in Australia. These other amounts that form part of their taxable income are taxed as working holiday maker taxable income.

1.29 A person may be a working holiday maker for part of an income year and, for the balance of that income year, hold a different visa that does not qualify them as a working holiday maker. In these circumstances, the working holiday maker rates of income tax apply only to income derived during the period of the year of income in which the person qualifies as a working holiday maker. For the balance of the year of income in which they are not a working holiday maker, the person must assess their residency status, determined on a whole of year basis (typically as a non-resident) and the relevant rates of tax will apply.

Example 1.2 : Working holiday maker taxable income and other income

Fabio is a non-resident for income tax purposes. Fabio earns $50,000 while a working holiday maker in Australia from 1 July 2017 to 31 March 2018 and has $1,000 of deductions that relate to this income. His working holiday taxable income is therefore $49,000. He also earns a $39,000 salary in Australia while holding a different class of visa from 1 April 2018 to 30 June 2018 which does not result in him being a working holiday maker for this period.

Fabio pays tax at the rate of 19 per cent on the working holiday taxable income from $0 to the tax threshold of $37,000 and 32.5 per cent for the remaining $12,000 of his total of $49,000 of working holiday taxable income.

For Fabio's taxable income of $39,000 that is not working holiday taxable income, he pays income tax at the 32.5 per cent non-resident rates for the first $38,000. The remaining $1,000 is taxed at 37 per cent, as his overall income for the year is higher than $87,000 so he moves into the next tax bracket.

1.30 The income tax rate schedules for resident and non-resident taxpayers are also amended to ensure that:

•

the working holiday maker income tax rates correctly apply to working holiday maker taxable income; and

•

working holiday maker taxable income is correctly taken into account if an individual is assessed by the Commissioner where, in a year of income, they have both working holiday maker taxable income (with rates under Part III of Schedule 7 of the Income Tax Rates Act 1986 to apply) and other taxable income earned in a part of the income year in which they were not a working holiday maker (to which either Parts I for residents or Part II for non-residents would apply).

[Income Tax Rates Amendment (Working Holiday Maker Reform) Bill 2016, items 3, 4, 5 and 6, clauses 1 and 4 of Part I and clauses 1 and 4 of Part II to Schedule 7 of the Income Tax Rates Act 1986]

Increase in departing Australia superannuation payments tax

1.31 Temporary residents, including working holiday makers, who work in Australia, and have superannuation contributions paid by their employer, are entitled to claim their superannuation benefits once they leave Australia and their visa expires or is cancelled. This payment is called a departing Australia superannuation payment. The rates of tax applied to the departing Australia superannuation payment depend upon the make-up of the payment.

1.32 Increasing the rate of tax on departing Australia superannuation payments for working holiday makers is consistent with the objective of superannuation which is to support Australians in their retirement.

1.33 The Superannuation (Departing Australia Superannuation Payments Tax) Act 2007 is amended so that the rates of the departing Australia superannuation payments tax for working holiday makers is as follows:

Table 1.3 : Departing Australia superannuation payment tax rates

[Superannuation (Departing Australia Superannuation Payment Tax) Amendment Bill 2016, item 1, Superannuation (Departing Australia Superannuation Payment Tax) Act 2007, subsection 5(3)]

1.34 No change is made to the nil rate of tax applying to departing Australia superannuation payment tax for the untaxed element of a lump sum as this generally represents the member's own after-tax superannuation contributions. The roll-over amount that is an excess untaxed roll-over also continues to have no departing Australia superannuation tax applied. This is because imposing tax on this component would result in double taxation.

1.35 The increase in the departing Australia superannuation payment tax only applies to departing Australia superannuation payments made from 1 July 2017 that relate to superannuation contributions that were made when the person was a working holiday maker.

1.36 The increase in the rate of tax is also consistent with the objective of superannuation, which is to support Australians in their retirement.

Registration of employers of working holiday makers

1.37 The Treasury Laws Amendment (Working Holiday Maker Reform) Bill 2016 sets up a legislative framework allowing the Commissioner to establish a mandatory registration process for employers of working holiday makers. The framework applies different rates of withholding to payments to working holiday maker employees based on whether their employer is registered at the time of withholding. The amendments allow the date of effect of an employer's registration to be made publicly available on the Australian Business Register.

Registration requirements

1.38 Employers of working holiday makers that have an obligation to withhold from payments made to these employees must apply for registration with the Commissioner. Such employers are required to make this application in the approved form to the Commissioner by the day on which the entity is first required to withhold an amount from such withholding payments or within such further time the Commissioner allows. An employer may be liable to an administrative penalty of 20 units for failing to register with the Commissioner by the due date. This registration process applies in addition to a payer's obligations to register for PAYG Withholding. [Treasury Laws Amendment (Working Holiday Maker Reform) Bill 2016, Schedule 2, item 4, section 16-146 of Schedule 1 to the TAA 1953]

1.39 As the registration application is required to be in the approved form, the Commissioner has flexibility to specify the manner of providing the information required in the application (refer section 388-50 of Schedule 1 to the TAA 1953). This allows the Commissioner to minimise compliance costs for employers by providing a variety of options for registration, such as an online process or by telephone. [Treasury Laws Amendment (Working Holiday Maker Reform) Bill 2016, Schedule 2, item 4, subsection 16-146(2) of Schedule 1 to the TAA 1953]

1.40 The approved form also allows the Commissioner to specify the content of the registration application (refer section 388-50 of Schedule 1 to the TAA 1953). The approved form may require employers to provide information relating to the entity's employment, or proposed employment, of working holiday makers. [Treasury Laws Amendment (Working Holiday Maker Reform) Bill 2016, Schedule 2, item 4, paragraph 16-147(1)(c) of Schedule 1 to the TAA 1953]

1.41 This will allow the Commissioner to collect and derive employment data and statistical information. For example, the Commissioner may collect data such as the geographical location of working holiday maker employers and be able to determine the number of working holiday makers working in different sectors of the economy.

1.42 The approved form for the registration application also requires the entity to make a declaration to the Commissioner, stating that:

•

if the entity is carrying on a business, the entity has a genuine business requirement to employ one or more working holiday makers (such as a labour shortage);

•

the entity agrees to comply with the requirements of the Fair Work Act 2009 in relation to its employment of any individual who is a working holiday maker; and

•

the entity agrees to check that any individual it employs as a working holiday maker holds a visa that qualifies that person to be a working holiday maker.

[Treasury Laws Amendment (Working Holiday Maker Reform) Bill 2016, Schedule 2, item 4, paragraph 16-147(1)(b) and subsection 16-147(2) of Schedule 1 to the TAA 1953]

1.43 Where the entity is not carrying on a business but still employing working holiday makers, the entity does not have to declare that the employment is necessary for a genuine business requirement. This could be the case where the employer has employed domestic workers, such as household staff.

1.44 Employers can check a person's visa details by registering for the Department of Immigration and Border Protection's free, online system (Visa Entitlement Verification Online). Alternatively, employers can ask their prospective employee to send their visa details directly to them using the Visa Entitlement Verification Online email function.

1.45 The Commissioner must only register an entity as a registered working holiday maker employer if the entity has in the approved form:

•

applied for registration as a registered working holiday maker employer;

•

made a declaration to the Commissioner; and

•

given to the Commissioner information relating to the entity's employment, or proposed employment, of working holiday makers.

[Treasury Laws Amendment (Working Holiday Maker Reform) Bill 2016, Schedule 2, item 4, subsection 16-147(1) of Schedule 1 to the TAA 1953]

1.46 An administrative penalty for false and misleading statements under section 284-75 of Schedule 1 to the TAA 1953 applies if an entity makes a false or misleading statement in its registered working holiday maker employer registration application. This includes providing incorrect information and making a false declaration. The penalty ranges from 20 penalty units for statements that are false or misleading because of a failure to take reasonable care to 60 penalty units if it was due to an intentional disregard of a taxation law.

Notification of the Commissioner's decision and the public register

1.47 The Commissioner must, within 30 days of an entity making its application, notify the entity whether it has been registered as a registered working holiday maker employer and, if it has been registered, the date the registration takes effect. The Australian Business Registrar is required to specify the day on which the registration takes effect on the Australian Business Register. These amendments allow the Australian Business Registrar to make such information publicly available, making it easy for working holiday makers and others to check the registration status of a potential employer. [Treasury Laws Amendment (Working Holiday Maker Reform) Bill 2016, Schedule 2, items 1 and 4, paragraph 26(3)(jc) of A New Tax System (Australian Business Number) Act 1999 and subsections 16-147(3), (4), (5) of Schedule 1 to the TAA 1953]

1.48 If the entity making an application has an Australian Business Number (ABN), the Commissioner is deemed to have notified an entity of its registration as a registered working holiday maker employer and the date of effect of the registration by having the Australian Business Registrar enter this information on the Australian Business Register. If the entity does not have an ABN, the Commissioner will notify the entity by other means (for example in writing, by telephone or electronically). [Treasury Laws Amendment (Working Holiday Maker Reform) Bill 2016, Schedule 2, item 4, subsections 16-147(4), (5), (6) and (7) of Schedule 1 to the TAA 1953]

1.49 If the entity making an application does not hold an ABN, the entity's registration status will not be made publicly available. The amendments do not require such entities to obtain an ABN.

1.50 If an entity is dissatisfied with the Commissioner's decision whether to register the entity, then it may object under Part IVC of the TAA 1953. [Treasury Laws Amendment (Working Holiday Maker Reform) Bill 2016, Schedule 2, item 5, table item 62 in section 20-80 of Schedule 1 to the TAA 1953]

Effect of registration on rates of withholding

1.51 Section 15-25 of Schedule 1 to the TAA 1953 allows the Commissioner to determine rates of PAYG Withholding to be applied to payments made by employers to employees. The PAYG Withholding schedules may deal differently with different payments and circumstances of recipients of payments.

1.52 These amendments require the Commissioner to have regard to whether an employer is a registered working holiday maker employer when making a withholding schedule. [Treasury Laws Amendment (Working Holiday Maker Reform) Bill 2016, Schedule 2, item 3, paragraph 15-30(fa) in Schedule 1 to the TAA 1953]

1.53 The Commissioner is expected to exercise his power to make PAYG Withholding schedules to provide different treatment based on whether an employer of a working holiday maker is registered as a registered working holiday maker employer, such that:

•

if an employer is registered as a working holiday maker employer with the Commissioner - the amount the employer is required to withhold from their withholding payments to working holiday maker employees is worked out based on the rates of income tax that apply to income derived by working holiday makers; or

•

if an employer is not registered as a working holiday employer with the Commissioner - the amount the employer is required to withhold from their withholding payments to working holiday maker employees is worked out as if the rate of income tax for the employee's taxable income less than $87,001 is 32.5 per cent. Standard rates of withholding apply for taxable income in other income brackets.

1.54 The rates of income tax that the Commissioner applies in assessing the working holiday maker's taxable income (being their assessable income derived in Australia while they are a working holiday maker less related deductions) are the same, regardless of whether their employer is registered as a registered working holiday maker employer. Following the assessment of the working holiday maker's taxable income on lodgement of their tax return, the Commissioner refunds any excess PAYG Withholding amount, that is, any amount that is not required to cover the working holiday maker's income tax liability.

1.55 Employers that are registered as registered working holiday maker employers are able to apply reduced PAYG Witholding rates to payments made to their working holiday maker employees compared to the rates that would apply if the employer was not registered. This concessional treatment is designed to provide additional incentives for an employer to register as a registered working holiday maker employer, as access to this withholding treatment may result in them being considered as more attractive employers by working holiday makers.

1.56 An entity that fails to withhold at the correct rate may be liable for an administrative penalty (section 16-25 of Schedule 1 to the TAA 1953).

Cancellation of registration

1.57 The Commissioner may cancel an entity's registered working holiday maker employer registration if the entity advises the Commissioner in the approved form that it does not employ, and does not intend to employ, any individual who is a working holiday maker. [Treasury Laws Amendment (Working Holiday Maker Reform) Bill 2016, Schedule 2, item 4, paragraph 16-148(1)(a) of Schedule 1 to the TAA 1953]

1.58 The Commissioner may also cancel an entity's registered working holiday maker employer registration if the Commissioner is satisfied that the entity or any entity related to the employer is not a fit and proper person. Entities related to the registered working holiday maker employer are:

•

if the entity is a partnership - a partner;

•

if the entity is a company (including where a company is acting in the capacity of a trustee of a trust) - any director, shareholder or employee of the company who participates in the management or control of the company; or

•

if the entity is a trustee of a trust - any entity who controls the trustee, including an entity who can appoint trustees who are most likely to manage the trust in the manner desired by the entity.

[Treasury Laws Amendment (Working Holiday Maker Reform) Bill 2016, Schedule 2, item 4, paragraph 16-148(1)(b) of Schedule 1 to the TAA 1953]

1.59 The Commissioner must notify an entity registered as a registered working holiday maker employer if the Commissioner is considering whether it, or an entity related to it, is a fit and proper person. The Commissioner must also give the entity the opportunity to make submissions on the matter within a period of 28 days of the Commissioner giving the entity that notice (submission period). [Treasury Laws Amendment (Working Holiday Maker Reform) Bill 2016, Schedule 2, item 4, subsection 16-148(3) of Schedule 1 to the TAA 1953]

1.60 In considering whether an entity is a fit and proper person the Commissioner must have regard to:

•

whether a court has made a finding, in proceedings commenced by the Fair Work Ombudsman, that an entity has contravened the Fair Work Act 2009;

•

whether the entity has been convicted of an offence for failing to withhold PAYG Witholding amounts; and

•

any relevant information the entity has provided in submissions to the Commissioner during the submission period.

[Treasury Laws Amendment (Working Holiday Maker Reform) Bill 2016, Schedule 2, item 4, subsection 16-148(4) of Schedule 1 to the TAA 1953]

1.61 The Commissioner is not limited to these matters and may have regard to other matters in making a decision.

1.62 The Commissioner must, having regard to the reason for the cancellation of an entity's registered working holiday maker employer registration, determine a period of suspension, starting when the cancellation takes effect. During the period of suspension the entity cannot apply for registration as a registered working holiday maker employer. A period of suspension may be appropriate, for example where the entity has been found liable for an offence under the Fair Work Act 2009 or for failing to withhold PAYG Withholding amounts under section 16-25 of Schedule 1 to the TAA 1953. [Treasury Laws Amendment (Working Holiday Maker Reform) Bill 2016, Schedule 2, item 4, subsection 16-148(5) of Schedule 1 to the TAA 1953]

1.63 The cancellation of an entity's registered working holiday maker employer registration takes effect on the day determined by the Commissioner. The Commissioner must notify the entity of the cancellation, the date the cancellation takes effect, and, if a period of suspension applies, that period. The Australian Business Registrar is required to specify the day on which the cancellation of the registration takes effect on the Australian Business Register. These amendments allow the Australian Business Registrar to make such information publicly available. [Treasury Laws Amendment (Working Holiday Maker Reform) Bill 2016, Schedule 2, items 1 and 4, subsections 16-148(2), (6), (7), and (8) of Schedule 1 to the TAA 1953 and paragraph 26(3)(jd) of A New Tax System (Australian Business Number) Act 1999]

1.64 If an entity is dissatisfied with the Commissioner's decision to cancel its registration as a registered working holiday maker employer or the period of suspension provided by the Commissioner then it may object under Part IVC of the TAA 1953. [Treasury Laws Amendment (Working Holiday Maker Reform) Bill 2016, Schedule 2, item 5, table item 63 of section 20-80 of Schedule 1 to the TAA 1953]

Basis of registration

1.65 For the avoidance of doubt, registration under these amendments is subject to cancellation (as described above), and future modification or extinguishment, by or under later legislation, without compensation. [Treasury Laws Amendment (Working Holiday Maker Reform) Bill 2016, Schedule 2, item 4, subsection 16-147(8)]

Allowing the Commissioner to provide information to the Fair Work Ombudsman

1.66 The disclosure of information by taxation officers of the taxation affairs of entities is prohibited, except in certain circumstances. Those exceptions have regard to the principle that disclosure of information should be permitted only if the public benefit from the disclosure outweighs the entity's right to privacy.

1.67 The exceptions from the prohibition on the disclosure of information will be broadened to permit taxation officers, on behalf of the Commissioner, to be able to disclose information that is for the purpose of ensuring an entity's compliance with the Fair Work Act 2009 to the Fair Work Ombudsman. This extends the current exception under which only information pertaining to an entity's actual or reasonably suspected non-compliance with a taxation law can be disclosed by taxation officers to the Fair Work Ombudsman. [Treasury Laws Amendment (Working Holiday Maker Reform) Bill 2016, Schedule 4, item 1, table item 5 in subsection 355-65(8) of Schedule 1 to the TAA 1953]

1.68 This new disclosure recognises the role of the Fair Work Ombudsman in monitoring, inquiring into, investigating and enforcing compliance with relevant Commonwealth workplace laws.

1.69 The Commissioner may provide information to the Fair Work Ombudsman where breaches of legislation that the Fair Work Ombudsman administers occur.

1.70 The ability of the Fair Work Ombudsman to identity and penalise breaches of Fair Work legislation provides greater protection to individuals in employment, in particular working holiday maker employees. Such employees may find themselves in a vulnerable position given their likely limited knowledge of Australian workplace laws and likelihood of having limited access to social support networks in Australia.

1.71 Information held by the Commissioner may assist the Fair Work Ombudsman in pursuing action against employers who are not complying with their obligations under the Fair Work Act 2009.

Commissioner reporting to the Treasurer on working holiday makers

1.72 The Commissioner will report annually to the Minister about the employment of working holiday makers, including statistics and information the Commissioner derives from the employer register. The Minister is required to table the report in each House of Parliament within 15 sitting days of that House after the day on which the Minister receives the report. [Treasury Laws Amendment (Working Holiday Maker Reform) Bill 2016, Schedule 3, item 3, section 352-25 of Schedule 1 to the TAA 1953]

1.73 The working holiday maker report will provide valuable information to stakeholders and Government, to ensure that they are better informed. The report will increase transparency about the industries that employ working holiday makers, including the regions and sectors they are employed in.

1.74 The Commissioner will provide an annual report for a financial year as soon as practicable after the 30 June. The amendment does not prescribe a period within which the Commissioner must publish the information. [Treasury Laws Amendment (Working Holiday Maker Reform) Bill 2016, Schedule 3, item 3, subsection 352-25(1) of Schedule 1 to the TAA 1953]

1.75 It is envisaged that the Commissioner will include aggregate statistical information that the Commissioner sources from income tax returns lodged by working holiday makers in the report. Therefore the report will be released once most working holiday makers have lodged and had their income tax assessments issued and the Commissioner has had time to compile the aggregate statistical data that the Commissioner is required to include in the working holiday maker report.

Changes to visa application fees and passenger movement charge

1.76 The visa application fee for Subclass 417 (Working Holiday) visas and Subclass 462 (Work and Holiday) visas is reduced from $440 to $390 by amending the Migration Regulations 1994. [Treasury Laws Amendment (Working Holiday Maker Reform) Bill 2016, Schedule 1, item 1, paragraphs 1224A(2)(a) and 1225(2)(a) of Schedule 1 to the Migration Regulations 1994]

1.77 The reduction in these visa application fees recognises the importance to the Australian economy of working holiday makers. Lowering the application cost for these visas will make Australia a more attractive destination for working holiday makers.

1.78 The Passenger Movement Charge Act 1978 is amended to increase the rate of the passenger movement charge imposed by the Act from $55 to $60. [Passenger Movement Charge Amendment Bill 2016, Schedule 1, item 1, Passenger Movement Charge Act 1978, section 6]

1.79 The increase in the rate of the charge helps ensure that the package of reforms does not have an adverse impact on the Budget.

Consequential amendments

1.80 The Income Tax Rates Amendment (Working Holiday Maker Reform) Bill 2016 makes consequential amendments to the tax rate threshold that applies to working holiday makers and to an example contained in the Income Tax Rates Act 1986 of what rate of income tax applies to working holiday makers to substitute $87,000 in place of $80,000. The amendments are contingent on the commencement of the amendment in the income tax rates threshold from $80,000 to $87,000 contained in the Treasury Laws Amendment (Income Tax Relief) Bill 2016. [Income Tax Rates Amendment (Working Holiday Maker Reform) Bill 2016, Schedule 1, items 9 to 11, table items 2 and 3 of clause 1 of Part III of the Income Tax Rates Act 1986]

1.81 Schedule 3 to the Treasury Laws Amendment (Working Holiday Maker Reform) Bill 2016 includes amendments to create a new Subdivision 352-C and consequential amendments to headings and guide material for Division 352 of Schedule 1 to the TAA 1953. [Treasury Laws Amendment (Working Holiday Maker Reform) Bill 2016, Schedule 3, items 1 to 3, heading to Division 352, section 352-1 and Subdivision 352-C of Schedule 1 to the TAA 1953]

Commencement, application and transitional provisions

Commencement

1.82 The provisions in the Income Tax Rates Amendment (Working Holiday Maker Reform) Bill 2016 generally commence on the date of Royal Assent. [Section 2 of the Income Tax Rates Amendment (Working Holiday Maker Reform) Bill 2016]

1.83 The provisions in Schedule 1 of the Treasury Laws Amendment (Working Holiday Maker Reform) Bill 2016 (which relates to the decrease in visa application charges) and in the Passenger Movement Charge Amendment Bill 2016 (which increases the passenger movement charge) commence on the later of:

•

1 July 2017; and

•

the day that the Income Tax Rates Amendment (Working Holiday Maker Reform) Bill 2016 commences.

[Section 2 of the Treasury Laws Amendment (Working Holiday Maker Reform) Bill 2016; section 2 of the Passenger Movement Charge Amendment Bill 2016]

1.84 However, these provisions do not commence at all if the Income Tax Rates Amendment (Working Holiday Maker Reform) Bill 2016 does not commence. [Section 2 of the Treasury Laws Amendment (Working Holiday Maker Reform) Bill 2016; section 2 of the Passenger Movement Charge Amendment Bill 2016]

1.85 The provisions in Schedule 2 of the Treasury Laws Amendment (Working Holiday Maker Reform) Bill 2016 (which relates to the registration of employers of working holiday makers), and in the Superannuation (Departing Australia Superannuation Payments Tax) Amendment Bill 2016, commence at the same time that the Income Tax Rates Amendment (Working Holiday Maker Reform) Bill 2016 commences. [Section 2 of the Treasury Laws Amendment (Working Holiday Maker Reform) Bill 2016; section 2 of the Superannuation (Departing Australia Superannuation Payments Tax) Amendment Bill 2016]

Application

1.86 The amendments made by Part 1 of Schedule 1 to the Income Tax Rates Amendment (Working Holiday Maker Reform) Bill 2016 (which change the income tax rates that apply to working holiday makers) apply in relation to assessable income derived by working holiday makers, less related income tax deductions, on or after 1 January 2017. [Income Tax Rates Amendment (Working Holiday Maker Reform) Bill 2016, Schedule 1, item 8]

1.87 The consequential contingent amendments made by Part 2 of Schedule 1 to the Income Tax Rates Amendment (Working Holiday Maker Reform) Bill 2016 (which relate to the increase in the $80,000 tax threshold to $87,000) apply to the 2016-17 year of income and later income years. [Income Tax Rates Amendment (Working Holiday Maker Reform) Bill 2016, Schedule 1, item 12]

1.88 The amendments made by Schedule 1 to the Treasury Laws Amendment (Working Holiday Maker Reform) Bill 2016 (which relate to the decrease in visa application charges) apply to an application for a visa made on or after the commencement of that schedule - that is the later of:

•

1 July 2017; and

•

the day Part 1 of Schedule 1 to the Income Tax Rates Amendment (Working Holiday Maker Reform) Act 2016 commences.

[Treasury Laws Amendment (Working Holiday Maker Reform) Bill 2016, Schedule 1, item 2; Part 59; clause 5901 of Schedule 1 to the Migration Regulations 1994]

1.89 The amendments made by Schedule 2 to the Treasury Laws Amendment (Working Holiday Maker Reform) Bill 2016 (which relate to the registration of employers of working holiday makers) apply in relation to an amount the entity must pay to the Commissioner under subsection 16-70(1) in Schedule 1 to the TAA 1953 if the requirement to withhold the amount arises on or after 1 January 2017. [Treasury Laws Amendment (Working Holiday Maker Reform) Bill 2016, Schedule 2, item 6]

1.90 The amendments made by Schedule 4 to the Treasury Laws Amendment (Working Holiday Maker Reform) Bill 2016 (which relate to the Commissioner providing information to the Fair Work Ombudsman) apply in relation to disclosures of information on or after 1 January 2017 (whether the information was acquired before, on or after that day). [Treasury Laws Amendment (Working Holiday Maker Reform) Bill 2016, Schedule 4, item 2]

1.91 The amendment made by the Superannuation (Departing Australia Superannuation Payments Tax) Amendment Bill 2016 applies to a departing Australia superannuation payment made on or after 1 July 2017 to a person where the payment includes amounts attributable to superannuation contributions made when the person was a working holiday maker. [section 2 of the Superannuation (Departing Australia Superannuation Payments Tax) Amendment Bill 2016]

1.92 The amendments made by the Passenger Movement Charge Amendment Bill 2016 apply in relation to the departure of persons from Australia on or after the commencement of the Bill - that is the later of:

•

1 July 2017; and

•

the day Part 1 of Schedule 1 to the Income Tax Rates Amendment (Working Holiday Maker Reform) Act 2016 commences.

1.93 However, the amendments do not apply if:

•

the person departs using a ticket or equivalent authority; and

•

the ticket or equivalent authority was sold or issued before the above time.

[Passenger Movement Charge Amendment Bill 2016, Schedule 1, item 2]