Tax Rules Change for Working Holiday Makers

 

Tax Rules Change for Working Holiday Makers

Tax Rules Change for Working Holiday MakersVisa (subclass 417)

During the Federal Budget earlier this year, the government proposed changes to tax rules for working holiday makers. The changes have been revised and are now law, and will be coming into effect on 1st January 2017.

There is no longer an option for working holiday makers to claim the tax free threshold. They will be taxed at 15% up to $37,000, and then taxed at ordinary marginal rates after that threshold.

Employers of working holiday makers will be required to undertake a simple, once-off registration with the Australian Taxation Office to be able to withhold tax at this new rate.

Employer registration has been extended to 31st January. If you are employing working holiday makers, you will not be penalised as long as you register by 31st January 2017. You can still use the new withholding tax rate of 15% from 1st January 2017.

Employers who do not register will be required to withhold tax at the 32.5% rate or higher, as per the foreign resident tax rates.

The worker must apply for this temporary visa before entering the country for the first time.  Although the visa is valid for up to one year, the worker can generally only be employed with one employer for a maximum of six months.

ATO Notification

Many registered agents and employers, who have previously employed foreign workers, have already been notified by the ATO of the coming changes and been advised to register for the new tax.

Tax for Working Holiday Makers

Weekly Earnings Weekly Rate
$0 – $711 15% up to $37,000 p.a. if employer registered for working holiday maker tax
$712 – $1,673 32.5% ($37,001 to $87,000)
$1,673 – $3,461 37% ($87,001 to $180,000)
$3,461 and over 45% over $180,000
Note the above rates do not include Medicare levy of 2% or the Temporary Budget Repair Levy of 2% for incomes over $180,000.

Payment Summaries for Working Holiday Makers

For working holiday makers who work both before and after 1st January 2017, two payment summaries will be required, with the two different tax rates applying to the gross payments, depending upon the time of payment.

Departing Australia Superannuation Payment for Working Holiday Makers

From 1st July 2017, the rate of tax on the Departing Australia Superannuation Payment (DASP) for working holiday makers will be increased to a flat rate of 65%. This will apply to all components of the payment.

source – (ICB – www.icb.org.au)

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