Are You Employing Working Holiday Makers?

Extended registration for employers of working holiday makers (backpackers)…

As long as you register by 31 January 2017, you will not be penalised and you can still use the new withholding tax rate of 15% from 1 January 2017.

Who can hire working holiday makers?

Anybody can hire working holiday makers, especially if there is a need of labour for a short period of time.

Agriculture, hospitality, construction and domestic services often use working holiday makers, or backpackers, to meet this demand.

Who are entitled to be working holiday makers?

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.

Working holiday makers’ tax rate

From 1 January 2017, the working holiday makers’ 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.

If eligible, working holiday makers remain entitled to superannuation.

How to employ working holiday makers

To employ working holiday makers in Australia on a visa subclass 417 or 462, you:

NOTE: Penalties may apply if you fail to register.

How to register as an employer of working holiday makers (backpackers)?

You may register as an employer of working holiday makers by using this Working Holiday Maker Registration Tool.

Once you have registered you can start withholding tax at the 15% rate, remembering to 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 tax 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 fail to register as an employer of working holiday makers.

For further details please go to ATO website: https://www.ato.gov.au/business/your-workers/employers-of-working-holiday-makers/?tpissue-49-2016

If you have questions about withholding tax for working holiday makers please contact the accountants at our Epping office

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