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  • Taxation of Australian resident WHMs from NDA countries

    As a result of the Federal and High Court decisions, eligible working holiday makers (WHMs) may be taxed on the same basis as a resident Australian national if they are both:

    • from a non-discrimination article (NDA) country
    • an Australian resident for tax purposes.

    Most WHMs are foreign residents for tax purposes. You need to work out your residency as a WHM if you come to Australian for a working holiday or visit.

    On this page

    Who this applies to

    You may be taxed on the same basis as a resident Australian national if you satisfy all the following:

    • are the holder of a visa subclass 417 Working Holiday or 462 Work and Holiday
    • a resident of Australia for tax purposes for the whole or part of the income year
    • from one of the following NDA countries
      • Chile
      • Finland
      • Germany (for 2017–18 and later income years)
      • Israel (for 2020–21 and later income years)
      • Japan
      • Norway
      • Turkey
      • United Kingdom.    

    A resident Australian national is a person who meets both of the following:

    • the person is a resident of Australia for tax purposes
    • the person is a permanent resident of Australia or an Australian citizen.

    Court decision

    On 3 November 2021, the High Court handed down its decision in Addy v Commissioner of Taxation in favour of the taxpayer.

    The Court 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 that normally apply. The circumstances in which the taxpayer was an Australian resident were unique to her case.

    Who this court decision applies to

    Most of Australia’s tax treaties do not contain a non-discrimination article. This decision is only relevant to eligible WHMs from an NDA country.

    Most holders of working holiday visas will not be Australian residents for tax purposes. That is because people who come to Australia for the purpose of a holiday, even if they work while here, generally don't become residents of Australia.

    The decision may be applicable to you in the less common situation where all of the following applies:

    • you held a working holiday visa
    • you became an Australian resident for tax purposes
    • you are a citizen of an NDA country.

    We may consider you to be an Australian resident for tax purposes if:

    • you change your purpose for being in Australia
    • this is supported by you obtaining a different visa that allows you to stay in Australia and work for a purpose other than having a holiday.

    To work out your residency as a WHM, see Are you an Australian resident if you come for a working holiday or visit?

    What this court decision means for you

    How this decision will affect you as a WHM will depend on your situation.

    If you are a:

    • WHM from an NDA country who is not an Australian resident, or a WHM from a non-NDA country
      • tax rates will continue to apply at the 15% rate
      • your employer will continue to withhold tax at the 15% rate
      • you do not need to lodge an income tax return if all the income you earn was salary or wages while you were a WHM and your total taxable income for the income year was less than
        • $37,001 in 2019–20 and earlier income years
        • $45,001 from 2020–21 and later income years     
    • WHM from an NDA country and an Australian resident for tax purposes

    If your tax return is assessed on the same basis as a resident Australian national's tax return, then:

    In some situations you may also need to include foreign income (for example foreign bank interest). Whether you need to depends on the application of the relevant double taxation agreement. For more information contact us.

    How to lodge or amend as a working holiday maker

    If you are from an NDA country, you can lodge or amend a tax return if, during an income year, you were both:

    • in Australia at any time (on and after 1 January 2017)
    • considered an Australian resident for tax purposes.

    A registered tax agent may be able to help you lodge or amend your return. You can find a list of registered Australian tax agents by visiting tpb.gov.auExternal Link

    Registered tax agents are the only people allowed to charge a fee to prepare and lodge your tax return. If you use a registered tax agent, they will need to have a current authorisation from you to act on your behalf and they will need to have a way to pay you any refund you may be due.

    In this section

    Current and future tax return lodgments

    If you choose to lodge an individual income tax return, you should include:

    • your residency status at the resident label
    • all your income, including your foreign-sourced income such as bank interest and dividends (in the income section of the income tax return)
    • if applicable, the number of months you were an Australian resident (in the Adjustments section at the question about the part-year tax-free threshold)
    • your WHM income (in the income section of the tax return and in the Adjustments section at the question about WHM net income)
    • your nationality (in the Adjustments section at the question about WHM net income).

    Prior income years

    How you report your residency status and income for prior income years will depend if you have:

    Not previously lodged an income tax return

    If you didn't lodge a tax return for a prior income year, you can still lodge one. If you are lodging your return yourself you will need to lodge a paper tax return or speak to your tax agent about lodging a return on your behalf. For each relevant income year attach further information telling us your nationality.

    When lodging, you will need to provide the following additional information on a separate sheet of paper:

    • Schedule of additional information – item A4
    • the word Addy (to help identify this lodgment)
    • your name, address and tax file number
    • your nationality.

    The nationality field is not included in prior year return forms, and we cannot capture the additional information with an electronic lodgment.

    Tax agents lodging returns on behalf of working holiday makers in this circumstance may contact us.

    Previously lodged an income tax return

    If you have lodged a tax return for a prior year and are eligible to be assessed on the same basis as a resident Australian national, you can either:

    Amendment time limits

    A prior income year will be outside the amendment time limits if more than the following time has passed since the Notice of Assessment was issued to you:

    • 2 years – if you don't have any foreign source income to include
    • 4 years – if you do have foreign source income to include.

    If the time limit has passed and you lodge an objection it must include an extension of time request as outlined below.

    Information to provide

    You will need to lodge a paper return for each relevant income year and attach further information telling us your nationality. As part of your amendment request or objection you should include:

    • details of any foreign-sourced income that was not declared on your original income tax return
    • information showing you are an Australian resident for tax purposes – including
      • the word Addy (to assist in identifying the amendment request)
      • that you have been present in Australia for at least 6 months
      • that you intend to stay in Australia longer term
      • evidence that you are staying in Australia other than for a purpose of having a holiday or a visit.    
       

    Without this information, it is unlikely you can show you are a resident and your request may be finalised based on the information we have available.

    For an out of time objection where the time limit has passed you should also include an extension of time request setting out why the objection was not lodged within time limit. Stating that you were waiting for the outcome of the Addy case is sufficient for this purpose.

    For more information, see:

    Vary pay as you go withholding

    Your employer will continue to withhold tax from your salary or wages at the rate of 15%. You can lodge a tax return to get a refund if the amount of tax you owe is less than the amount of tax they have withheld.

    You may apply for a variation to vary the rate or amount of withholding your employer withholds from your salary or wages if you are an Australian resident for tax purposes and you are from an NDA country. However, a variation can only be considered if you have been previously treated by the Commissioner as being a resident of Australia in one of the following ways:

    • by being assessed on the same basis as an Australian resident for one of the two immediately preceding income years
    • in a private ruling by quoting the authorisation number of that ruling.

    To be able to process your PAYG withholding variation application you will need to include the following when you apply:

    • select reason code 12A2 ‘other reasons- excess withholding’, and
    • in the free text field input ‘WHM’ and information that pertains to your residency – for example, ‘residency based on prior income tax assessment', or state 'private ruling' and the provide the authorisation number.

    For more information, see:

      Last modified: 17 Dec 2021QC 67532