Tax Changes To Working Holiday Makers

In November 2016 the Treasurer announced that working holiday makers would no longer be taxed at the proposed 19% tax rate and that this rate would be reduced to 15%. This is effective from the 1st of January 2017 and applies to earnings up to $37,000.00. Ordinary marginal tax rates will apply after that. Working holiday makers will also no longer be entitled to claim the tax free threshold.

If employers choose not register they will need to withhold tax at 32.5%.

You are a working holiday maker if you have a visa subclass:

  • 417 (Working Holiday).
  • 462 (Work and Holiday).

To be able to withhold at this rate employers will be required to undertake a one off registration to notify the Australian Tax Office (ATO) that they are a genuine employer of working holiday makers. This can be done via the ATO website. The employer must declare on the form:

  • That they comply with the ‘Fair Work Act 2009’ in relation to the employment of any individual who is a working holiday maker.
  • That the employer agrees to check that the holiday maker is employed within the meaning of the ‘Income Tax Rates Act 1986’, (i.e. The employee holds a 417 or 462 visa).
  • Is a genuine employer of working holiday makers.

Departing Australia Superannution Payments (Dasp)

The tax rate changes also apply to Departing Australia Superannuation Payments. This is for employees that have had super contributions made on their behalf. If Superannuation payments have been made on behalf of a working holiday maker their super will be taxed at 65 per cent when it is paid. This is effective from the 1st of July 2017.

For more information please contact our office on (02) 6883 2200 or visit the following ATO websites:

https://www.ato.gov.au/TWHM/

https://www.ato.gov.au/individuals/international-tax-for-individuals/coming-to-australia/working-holiday-makers/

https://www.ato.gov.au/general/new-legislation/in-detail/direct-taxes/income-tax-for-individuals/tax-rules-to-change-for-temporary-working-holiday-makers/

Disclaimer