News for temporary working holiday makers and their employers
If you hold a visa subclass 417 (Working Holiday) or 462 (Work and Holiday), you are a temporary working holiday maker.
On 27 September 2016, the Treasurer announced that from 1 January 2017 the government will set the tax rate applying to working holiday makers 19 per cent on earnings up to $37,000, with the balance taxed at ordinary marginal tax rates. Now this tax rate would be reduced to 15 per cent based on the Treasurer's announcement on the 28 November 2016.
Most working holiday makers are not eligible for tax free threshold as they will be foreign resident taxpayers. If you are a resident for tax purpose, the tax free threshold will be impacted by any working holiday maker income you earn.
Employers of working holiday makers must register to withhold tax at the working holiday maker tax rate before making your first payment. Employers who do not register will be required to withhold tax at the 32.5 per cent rate. Penalties may apply if you fail to register online
Employers will need to issue two payment summaries to these working holiday makers who worked for both before and after 1 January 2017 as those period are taxed differently. The two payment summaries are to cover the following periods:
- 1 July to 31 December, and
- 1 January to 30 June.
Make sure the employment dates are accurate. Employers are required to pay superannuation to eligible temporary working holiday makers to their nominated retirement fund. Working holiday makers' super will be taxed at 65% when it is paid to them. This Departing Australia superannuation payment tax rate is effective from 1 July 2017. More details from the ATO website.