On 1 January 2017, tax rates changed for working holiday makers who are in Australia on a 417 or 462 visa.
What does this mean for you?
If you currently employ a working holiday maker on a 417 or 462 visa:
- You must register with the ATO by 31 January 2017 so you can withhold the correct amount tax.
- From 1 January 2017, you should withhold 15% from every dollar earned up to $37,000 with foreign resident tax rates applying from $37,001.
- If you employed a working holiday maker before and after 1 January 2017, you need to issue two payment summaries for this financial year
- one for income earned up to 31 December 2016 (using code S)
- one for income earned from 1 January 2017 (using code H).
- If you don’t register, penalties may apply and you’ll need to withhold at the foreign resident tax rate of 32.5%
- Register as an employer of working holiday makers
- Use Visa entitlement verification onlineExternal Link to check if your worker has a visa that allows them to work in Australia
You will need to make some adjustments to your accounting system. We found useful instructions here:
Update 22 March: Xero have now included backpackers tax in Payroll:
Update the status for existing working holiday makers
- In the Payroll menu, select Employees.
- Click the employee’s name to open their details.
- Click the Taxes tab.
- From Residency Status, select Working Holiday Maker.
- Unselect the Has Approved Withholding Variation checkbox.
- Click Save Only.
If you require assistance with any of the above, don’t hesitate to call your boring accountant on 07 3160 7386.
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