This information about the new Backpacker Tax will be relevant for employers who currently employ holiday makers on 417 and 462 visas. The changes mean that these working holiday makers will no longer be classified as residents for tax purposes from 1 January 2017.
Action Required by Employers
- Use Visa entitlement verification online to check if your worker has a visa that allows them to work in Australia.
- Register with the ATO as an employer of holiday makers. To do so, you must have a PAYG withholding registration and an ABN or a withholding payer number.
- Once registered, employers can apply a withholding tax rate of 15% to the first $37,000 of income of a working holiday maker on a 417 or 462 visa. Income over $37,000 will be subject to normal foreign resident withholding rates.
If Businesses Do Not Register
Without registration you are required to withhold income tax at the normal foreign resident withholding tax rates of 32.5% from the first dollar. You may be issues with a penalty by the ATO for failing to register.
If you require assistance or advice on these steps, please contact us on (02) 9908 9888.