In Australia, there are approximately 100,000 working holiday makers employed each year. Any employer can hire working holiday makers provided they meet the requirements to do so. Employers must confirm the working holiday maker has a valid visa subclass, either 417 (Working Holiday) or 462 (Work and Holiday).
Employers will need to register to apply the 15% working holiday maker tax rate and declare they are aware of the obligations associated, including complying with the Fair Work Act 2009. Working holiday makers can’t claim the tax-free threshold and must provide their tax file number (TFN). Employers who do not register must withhold tax at 32.5% from every dollar earned up to $87,000 and foreign resident withholding rates apply to income over $87,000. Those who do not register may be subject to penalties.
Working holiday maker tax rate:
Once registered, employers can withhold 15% from every dollar that a working holiday maker earns up to $37,000. Tax rates change for amounts above this. The tax rate applies to all payments made to working holiday makers, including:
- Salary and wages.
- Termination payments.
- Unused leave.
- Back payments, commissions, bonuses and similar payments.
Eligible workers are entitled to receive super payments from their employers. When leaving Australia, working holiday makers can apply to have their super paid to them as a Departing Australia Superannuation Payment (DASP). The tax on any DASP made to working holiday makers on or after 1 July 2017 is 65%.
Unless reporting through Single Touch Payroll, employers are required to provide a payment summary to every working holiday maker they employ. All payments to a working holiday maker must be shown in the gross income section of the payment summary and identified using H in the gross payment type box. This is to help your worker to prepare their income tax return. Employees who previously held a working holiday visa but do not anymore will need two payment summaries for the financial year, one for the period they held a 417 or 462 visa and the period when they did not.