After much discussion in parliament, the government has decided that the tax withheld from payments to working holiday makers with 417 or 462 visas will change from 1 January 2017 in what has been dubbed the ‘Backpacker Tax’.
If you employ working holiday makers, from 1 January 2017 you must withhold 15% from every dollar earned up to $37,000. You must register to use this rate however, you can do this online at www.ato.gov.au/whmreg (as long as you are registered for pay as you go withholding (PAYGW). You and your employees can confirm your registration using the ABN Lookup tool within five working days of registering.
What happens if I don’t register?
The ATO has advised that the deadline for registration has been extended to 31 January 2017. You can still withhold tax at 15% from 1 January 2017 without being penalised.
If you employ working holiday makers but don’t register, you must withhold tax at 32.5% and may be subject to penalties.
Where can I find more information?
Visit www.ato.gov.au/WHM to find the information you need and what to do as a business owner.
If you aren’t sure, or suspect an employee is a 417 or 462 visa holder, check up on them at: https://www.border.gov.au/Busi/visas-and-migration/visa-entitlement-verification-online-%28vevo%29