Registration has been extended to 31 January. If you are employing working holiday makers, you will not be penalised as long as you register by 31 January 2017. You can still use the new withholding tax rate of 15% from 1 January 2017.
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.
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.
What you need to do
To employ working holiday makers in Australia on a visa subclass 417 or 462, you:
- must register with us to withhold at the working holiday maker tax rate before your first payment to a working holiday maker
- should check your worker has a visa subclass 417 or 462 using the Visa Entitlement Verification OnlineExternal Link service.
Penalties may apply if you fail to register.
Once you have registered you can start withholding at the 15% rate, print the confirmation screen for your records.
How to tax a working holiday maker
The 15% tax rate only applies to salary and wages paid from 1 January 2017. You must register to withhold at this rate.
If you don’t register, you must use the foreign resident withholding rates which start at 32.5% for the first $37,000.
Penalties apply if you employ a working holiday maker with visa subclass 417 or 462 and you don’t register as an employer of working holiday makers.