New obligations apply for working holiday makers and their employers.
Last September the Treasurer announced that from 1 January 2017 working holiday makers would be taxed at 19% on earnings up to $37,000. Then, in November it was announced that there would be a further tax rate cut from 19% to 15%.
Despite some upset, the Government advises that the changes are in place to benefit working holiday makers.
For employers, the following is required:
- If you employ workers who hold a Working Holiday visa (subclass 417) or Work and Holiday visa (subclass 462) then you will be required to undertake a simple, once-off registration with the Australian Tax Office to be able to withhold at this new rate
- this registration must be done prior to making your first payment to the employee who holds a Working Holiday visa. If you don’t register you will be required to withhold tax at the foreign resident withholding rate, starting at 32.5%, and penalties may apply
- if you employed a working holiday maker both before and after 1 January 2017, you will need to create two payment summaries for the 2016/17 financial year. One for income earned up to 31 December 2016, and another for income earned from 1 January 2017.
If you’d like to know more about the changes do not hesitate to get in touch with Mark, Business Services Manager on 03 5443 0344.