Backpacker’s Tax

back packers

Let’s demystify the riveting questions keeping you awake at night, about “Backpacker’s Tax.” It affects both employers and employees and the implications should not be taken lightly, unless you want to end up with some nasty surprises at the end of the tax year.

What’s all the fuss?
Since 1st January 2017, people working in Australia holding 417 visas or 462 visas (working holiday visa’s) will be affected by the new “Backpacker’s tax”.

What to do if you’re an EMPLOYER
You will need to check your foreign employee’s current working visa, that is, if they are on 417 visas or 462 visa’s, if so, you will need to implement the following steps:

  1. By 31st January 2017, you will have been required to register with the ATO, to withhold the right amount of tax for your employees. Registration can be done through the following website: https://www.ato.gov.au/business/registration/work-out-which-registrations-you-need/taxation-registrations/employer-registration–working-holiday-makers/
  2. For wage payments to employees who are affected by the “Backpacker Tax”, you need to withhold:
    • 15% for each dollar paid before the first $37,000
    • 32.5% for each dollar paid between the first $37,001 and $87,000
    • 37% for each dollar paid between the first $87,001 and $180,000
    • 45% for each dollar paid after the first $180,000
  3. When you issue Employee Payment Summaries for 2016/17 financial year, you will need to issue two payment summaries for employees with working holiday visas.
    • One for income earned up to 31st Dec 2016 (with Code S)
    • One for income earned from 1st January 2017 (with Code H)

What to do if you’re an EMPLOYEE

  1. If you or you know someone, currently holding a working holiday visa and has worked after 1st January 2017, notify your employer to ensure correct tax is withheld from your/their salary.
  2. If you are leaving Australia and want to claim a “Departing Australia Superannuation Payment”, from July 2017 onwards, you will lose 65% of your super in tax.

Dennis Huang
Senior Business Adviser

If you need any further assistance, please feel free to contact Integra Business Accountants who will be happy to help you.
P +61 08 9527 3071
E admin@integra-ba.com.au