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DO YOU EMPLOY BACKPACKERS? REGISTER AS A HOLIDAY MAKERS EMPLOYER

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%

Next steps:

You will need to make some adjustments to your accounting system. We found useful instructions here:

XERO

https://help.xero.com/au/Payroll-Employees-Backpacker-AU

Update 22 March: Xero have now included backpackers tax in Payroll:

Update the status for existing working holiday makers

  1. In the Payroll menu, select Employees.
  2. Click the employee’s name to open their details.
  3. Click the Taxes tab.
  4. From Residency Status, select Working Holiday Maker.
  5. Unselect the Has Approved Withholding Variation checkbox.
  6. Click Save Only.

MYOB

http://help.myob.com/wiki/display/ar/Withholding+the+’backpacker+tax’+in+AccountRight

RECKON

http://kb.reckon.com.au/issue_view.asp?ID=5510&_ga=1.158331128.359605336.1485729884

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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