One of the final measures that passed through Parliament last year was the so-called backpacker tax. This measure applies to the employment of working holiday makers in Australia. If you are an employer and employ people visiting here on a 417 or 462 visa, you must register them with the Australian Taxation Office by 31 January. The tax rates that apply to working holiday makers from 1 January are as follows:
Table A: Working holiday makers income tax rates for 2016–17 from 1 January 2017
| Tax rate | Value (a) | Taxable income |
|---|---|---|
| 15% on each $1 up to $37,000$0–$37,000 | 0.15 | $0–$37,000 |
| 32.5% on each $1 over $37,000 to $87,000 | 0.325 | $37,001–$87,000 |
| 37% on each $1 over $87,000 to $180,000 | 0.37 | $87,001–$180,000 |
| 47%* on each $1 over $180,000 | 0.47 | $180,001 and over |
* Includes the Temporary Budget Repair Levy of 2%
If no TFN is provided you must withhold at 47% on total payments made. If using formulas, the value of ‘a’ is 0.47. The ATO has provided a working holiday maker registration form at this link: https://www.ato.gov.au/twhm/
Employers should be aware that if they employ working holiday makers:
- they must register to use the new rate by 31 January;
- to withhold the new rate from 1 January;
- to issue 2 PAYG Summaries for 2016/17 (one from 1/7/16 to 31/12/16 and the other from 1/1/17 to 30/6/17); and
- failure to register may result in penalties and they must withhold 32.5% from all payments to working holiday makers.
Superannuation is also payable to working holiday makers under certain circumstances. For more information about the arrangements for working holiday makers, do not hesitate to contact me.
Maggie Diaz
Coming or Going, Princes Pier Port Melbourne (1960s)
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