New Working Holiday Maker tax changes (Backpackers Tax).

Updated: Jul 2, 2019


What is the Working Holiday Maker program?

The Working Holiday Maker program allows young adults (18 to 30) from eligible partner countries to work in Australia while having an extended holiday. Work in Australia must not be the main purpose of the visa holder’s visit.

Anybody can hire a working holiday maker, especially where there is a need for labour for a short period of time. Agriculture, hospitality, construction and domestic services often use working holiday makers, or backpackers, to meet this demand.

Working holiday makers hold a visa subclass 417 or 462 that allows them to work while in Australia. You should not employ or pay someone for work if they don’t have permission to work in Australia.

What are the changes?

From 1 January 2017, the working holiday maker tax rate of 15% applies from the first dollar earned. They cannot claim the tax-free-threshold regardless of their residency status and must provide a tax file number (TFN), otherwise you need to withhold at the top rate of tax.

Working holiday makers remain entitled to superannuation if they are eligible.

As an employer do I need to be registered?

You need to register with the ATO before you employ a working holiday maker. If you are registered, you will be able to withhold at a flat rate of 15% up to $37,000 in total payments made to each individual working holiday maker within an income year. Where total payments exceed $37,000, e-PayDay® will automatically apply the applicable withholding rate.

How do I register?

Registering as an employer of working holiday makers (WHM) is quick and easy using the ATO registration tool available here.

What do I need to do if I am not a registered employer?

If you have not registered with the ATO to withhold at working holiday maker tax rates, you are required to withhold at foreign resident rates as specified in the tax tables for weekly, fortnightly or monthly payments.

What payroll software do I need?

e-PayDay® has been upgraded to support the new requirements for Working Holiday Makers and is available here (from the 23 December 2016).

With the changes to Working Holiday Makers, what do I do on 1 January 2017?

You will need to ensure you are registered with the ATO, set the Working Holiday Makers option, Terminate and Reinstate applicable employees by following our instructions here.

Where can I purchase e-PayDay®?

If you are not currently using e-PayDay® but wish to take advantage of these new features, you can purchase a copy for the desktop or cloud.

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