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Backpacker tax saga must end: Nats senator

AAP logoAAP 24/11/2016

Uncertainty looms large over the backpacker tax as the government, Labor and crossbenchers remain deadlocked, but there are hopes a resolution may be reached as soon as Monday when parliament resumes.

Crossbenchers and the opposition have left the door open to a compromise on the income tax rate foreign fruit pickers pay that could lie somewhere between the 10.5 per cent the Senate wants and the government's plan for 19 per cent.

One Nation, with four votes that could decide the issue, has signalled support for a rate between 12 and 15 per cent.

"I still believe it's not tested and if this fails and it's at too high a rate, the farmers right across Australia will suffer," One Nation leader Pauline Hanson said on Friday.

Senator Hanson said the backpacker tax should start at 10.5 per cent, with the government to review it in a couple of years before looking at upping it to 15 per cent.

Labor leader Bill Shorten, who's previously vowed the issue would be decided by Christmas, said he's also willing to negotiate.

"Labor is prepared to work to fix the problem," he told reporters.

However, the votes of three Nick Xenophon Team senators, who sided with the government earlier this week, are now in doubt as the independent senator threatened not to deal with government bills until the Murray-Darling Basin plan is sorted.

And the government itself appears not to be in any mood for another compromise, saying it's already backed down from its original 32.5 per cent proposal.

Treasurer Scott Morrison says a reduction to 15 per cent would mean a loss of $120 million in revenue.

Agriculture Minister Barnaby Joyce signalled another move could delay a resolution even further.

"They'll just move again, and move again until the place looks chaotic."

Without an agreement, the government insists a court ruling means all working holiday-makers will pay 32.5 per cent tax from the first dollar they earn after January 1.

Mr Joyce's Nationals colleagues are keen for a resolution soon.

"We're now at the 11th hour and we must get it sorted next week," Nationals senator John Williams said.

Both the 10.5 per cent and the 32.5 per cent rates were bad ideas, the senator said, but the 10.5 per cent would be the "lesser evil, to be frank".

Greens senator Peter Whish-Wilson believes the real problem is a lack of follow-up when backpackers "self-assess" as Australian residents, saying the criteria around who qualifies as a resident should be clarified.

Otherwise, if the government really wanted to, it could direct the tax office to audit every backpacker who ticked the "resident" box when applying for a tax file number.

"That really is going to create a s***storm with agricultural producers if they do that," he said.

However, Prime Minister Malcolm Turnbull said backpackers who by definition were not residents were filling in forms saying they were and getting the benefits of the tax-free threshold.

"They're not entitled to do it if it's untrue; in fact it's a rort."

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