Changes to backpacker tax

From 1 January 2017, tax rates changed for working holiday makers who are in Australia on a 417 or 462 visa (these rates are known as ‘working holiday maker tax rates’).

If a business employs a working holiday maker in Australia on a 417 or 462 visa, from 1 January 2017, they should withhold 15% from every dollar earned up to $37,000, with foreign resident tax rates applying from $37,001.

Businesses must have registered with the ATO by 31 January 2017 to withhold at the working holiday maker tax rate. If you didn’t register, you will need to withhold at the foreign resident tax rate of 32.5%.

Penalties may apply to businesses employing holiday makers that don’t register.

If you missed this deadline please contact your Kothes accountant as soon as possible.

Also, note that businesses already employing working holiday makers will need to issue two payment summaries (with different rates) this year – one for the period to 31 December 2016, and a second for any period from 1 January 2017.