Working holiday makers (WHMs) are temporary visitors to Australia who hold a Working Holiday visa (subclass 417) or Work and Holiday visa (subclass 462).
Register as an employer of working holiday makers
Employers of WHMs must register with us to withhold tax at a special rate.
Register as an employer of working holiday makers provides information about:
- what you must do before you can register
- when and how to register
- checking your registration
- cancelling your registration.
Penalties may apply if you fail to register.
Check a worker has permission to work in Australia
You should only employ or pay someone for work if they have permission to work in Australia. Check a worker's visa status using the Visa Entitlement Verification OnlineExternal Link service.
Tax rates for working holiday makers
A special tax rate applies when you employ a WHM. A person will advise you that they are a WHM on their Tax file number declaration. The form asks workers to declare if they're a WHM, Australian resident, or foreign resident for tax purposes.
You should use the working holiday maker tax table to work out how much tax to withhold from payments you make to a worker who holds a visa subclass 417 or 462. However, if you receive a PAYG variation notice from us to vary the rate to withhold from payments made for an employee, you would then withhold at the varied amount.
Registered employers
If you're registered with us as an employer of WHMs, you should withhold tax at the WHM tax rate of 15% from the first dollar your WHM earns up to $45,000. Tax rates change for amounts above $45,000.
Use the tax table for working holiday makers to calculate the tax on all payments made to WHMs, including:
- salary or wages
- termination payments
- unused leave
- back payments, commissions, bonuses and similar payments
- payments to actors and entertainers.
WHMs must provide their tax file number (TFN). If they don't, you need to withhold tax at the top rate.
You should continue to withhold amounts based on the tax table for WHMs, unless you receive a PAYG variation notice from us for a particular WHM.
If a WHM questions you about the tax treatment of their payments, you may refer them to guidance available on our website via Working holiday makers.
Unregistered employers
If you're not registered with us as an employer of WHMs, you must withhold tax at 30% from every dollar earned up to $135,000. For income over $135,000, you need to apply foreign resident withholding rates.
Penalties may apply if you employ someone with a visa subclass 417 or 462, but don't register as an employer of WHMs.
Superannuation
Like other employees, WHMs are entitled to super and their employer must provide an option to choose a super fund.
WHMs can apply to have this super paid back to them as a Departing Australia superannuation payment (DASP) when they leave Australia.
Employing working holiday makers as independent contractors
Make sure you understand the differences between employees and independent contractors for tax and super purposes. Penalties and charges could apply if you incorrectly treat an employee as an independent contractor.
If your arrangement with your WHM means they're an employee, you must tax them using the tax table for working holiday makers even if they provide you with an ABN.
Payment summaries
Unless you report using Single Touch Payroll, you're required to give a payment summary to every WHM you employ.
All payments to a WHM must be shown in the gross income section of the payment summary and identified using H in the gross payment type box.
If your payment summary doesn't have this box, then put the letter H next to the income earned by the WHM. This is to help your worker to prepare their income tax return.
If an employee, who has been a WHM, advises you they are no longer on a working holiday visa, you'll need to withhold tax at a different rate and provide two payment summaries for the financial year:
- one payment summary while they worked using visa subclass 417 or 462
- one payment summary for the period they were not.
Ensure the employment dates you put on the payment summary are accurate.
High Court decision
On 3 November 2021, the High Court handed down its decision (in the matter of Addy v Commissioner of Taxation) in favour of the taxpayer.
It was decided that a British citizen who held a working holiday visa and was found to be an Australian resident was entitled to be taxed on the same basis as a resident Australian national, and not the WHM rates of 15% that normally apply. This was due to the operation of a non-discrimination article in the Australia-UK Double Tax Treaty. This only applies when a WHM is a national of certain countries and is a resident of Australia for tax purposes. Most WHMs are not residents for tax purposes.
This decision does not have any impact on employers.
If the worker is eligible to be taxed on the same basis as a resident Australian national, they can apply to vary their PAYG withholding. If their variation application is approved, we will inform you, as their employer, by sending you a PAYG variation notice.
If a WHM questions the taxation of their payments, you may refer them to guidance available on our website via Working holiday makers.