Show download pdf controls
  • Taxation of Australian resident WHMs from NDA countries

    See when working holiday makers (WHMs) who are Australian residents for tax purposes are taxed as Australian residents.

    On this page

    Who this applies to

    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.

    This is as a result of the 3 November 2021 Court decision.

    Most WHMs are foreign residents for tax purposes. If you come to Australia for a working holiday or visit, you can work out your residency for tax purposes.

    Criteria for same tax rate

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

    A resident Australian national is a person who is both:

    • a resident of Australia for tax purposes
    • 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 High 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 at the working holiday maker (WHM) rates that normally apply. The circumstances in which the taxpayer was an Australian resident were unique to her case.

    Who this decision applies to

    Most of Australia’s tax treaties do not contain a non-discrimination article. This court 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 apply to you if all of the following are met:

    • 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 decision means for you

    How this court decision will affect you as a WHM will depend on your situation, and if you are a:

    WHM from a non-NDA country or a non-resident from an NDA country

    If you are a WHM from an NDA country who is not an Australian resident, or a WHM from a non-NDA country, this court decision does not apply to you. Therefore:

    • tax rates will continue to apply at the 15% rate
    • your employer will continue to withhold tax at the 15% rate
    • you don't need to lodge a tax return if all your income was salary or wages while you were a WHM and your total taxable income for the income year was less than  
      • $45,001 from 2020–21 and later income years
      • $37,001 in 2019–20 and earlier income years.

    WHM from an NDA country and an Australian resident

    If you are a WHM from an NDA country and an Australian resident for tax purposes:

    If you lodge or amend your tax return and describe yourself as a resident, it does not mean we will accept you are a resident. We may review the information you have provided. If we do not accept you are a resident, the working holiday maker tax rates will apply.

    If you have chosen to lodge, and we disagree that you are a resident, you may need to pay more tax to us if not enough tax has been withheld by your employer (if less than 15% was withheld). You should be sure that you are an Australian resident before deciding to lodge as one. If you are unsure, you can contact us.

    Calculating how much tax to pay

    If you are a WHM from an NDA country and an Australian resident for tax purposes, the amount of tax you will pay depends on whether you have either:

    • only Australian-sourced income
    • both Australian and foreign-sourced income.
    Only Australian-sourced income

    If all the income you earned while you were a WHM had an Australian source, you only need to include that income in your tax return. In that situation:

    Example: resident WHM from an NDA country who only has Australian-sourced income

    Stefan is a WHM who is a citizen of Germany in Australia on a 417 Working Holiday visa. For the entire 2020–21 income year, Stefan is an Australian resident for tax purposes.

    He earns only Australian-sourced WHM income of $25,000 and no foreign-sourced income.

    Stefan is from an NDA country, an Australian resident for tax purposes and he has no foreign-sourced income. Therefore, being taxed on the same basis as a resident Australian national deriving the same income in the same circumstances, results in a lower amount of tax to pay.

    A resident Australian national's tax liability on the same income is calculated as:

    • (Taxable income − tax-free threshold) × tax rate = tax on taxable income, which is ($25,000 − $18,200) × 19% = $1,292.
    • In addition, they also:
      • pay the Medicare levy of 2% of taxable income, being $25,000 × 2% = $500
      • are entitled to a credit for the low income tax offset, being $700
      • are entitled to a credit for the low and middle income tax offset, being $255.

    In total, the resident Australian national earning the same income in the same circumstances as Stefan has to pay tax of $1,292 + $500 − $700 − $255 = $837.

    Therefore, Stefan has to pay tax of $837.

    End of example
    Both Australian and foreign-sourced income

    If you earned foreign-sourced income while you were a WHM (that is, while you held a WHM visa), you may need to include that foreign-sourced income as well as your Australian-sourced income in your tax return.

    This is because the effect of the NDA applying is that if you paid more tax than the tax a resident Australian national who earns the same income and in the same circumstances would have paid, you will pay tax on the same basis as that resident Australian national.

    If you earned both Australian and foreign-sourced income as a WHM:

    Generally, under double tax agreements, Australia has taxing rights to foreign-sourced income if you are:

    • a resident of Australia for taxation purposes only (meaning you're not also a resident for taxation purposes of the NDA country under its domestic law)
    • both a resident of Australia and the NDA country for taxation purposes and you are deemed to be a resident solely of Australia under the double tax agreement.

    Tax treaties can vary and you will need to check the treaty applying to you. For more information or to help you work out whether you need to include foreign-sourced income, you can contact us.

    Example: resident WHM from an NDA country who has both Australian and foreign-sourced income

    Richelle is a WHM who is a citizen of the United Kingdom in Australia on a 417 Working Holiday visa. For the entire 2020–21 income year, Richelle is:

    • an Australian resident for tax purposes
    • not a tax resident of the United Kingdom.

    She earned the following income:

    • Australian-sourced WHM income of $28,000
    • interest income on funds in a United Kingdom bank account of $1,500 (translated into Australian dollars)
    • dividend income on shares she owns in United Kingdom companies of $500 (translated into Australian dollars).

    As Richelle is from an NDA country and also considered an Australian resident for tax purposes, she will pay the lower amount of tax that results from being assessed either on the same basis as a resident Australian national earning the same income in the same circumstances, or as a WHM.

    As a resident WHM, the amount of tax Richelle will pay is calculated using the following amounts:

    • $28,000 WHM income × 15% tax rate = $4,200
    • a Medicare levy 2% of taxable income, being $28,000 × 2% = $560
    • a credit for the low income tax offset, being $700
    • a credit for the low and middle income tax offset, being $255.

    As Richelle is a temporary resident, her foreign interest and dividend income is not included in the calculation for working out how much tax she pays.

    Therefore, as a resident WHM Richelle pays:

    • $4,200 + $560 − $700 − $255 = $3,805.

    A resident Australian national who is solely resident of Australia for the purposes of the treaty would include in their assessable income the foreign interest and dividend income. The tax a resident Australian national will pay on the same income is calculated using the following amounts:

    • (Taxable income − tax-free threshold) × tax rate = tax on taxable income, which is (($28,000 + $1,500 + $500) − $18,200) × 19% = $2,242
    • a Medicare levy of 2% of taxable income, being $30,000 × 2% = $600
    • a credit for the low income tax offset, being $700
    • a credit for the low and middle income tax offset, being $255.

    In total, the resident Australian national earning the same income in the same circumstances as Richelle has to pay tax of $2,242 + $600 − $700 − $255 = $1,887.

    Therefore, Richelle has to pay tax of $1,887 as this is the lower of the 2 amounts.

    Richelle should therefore include her foreign interest and dividend income in her tax return to ensure the correct amount of tax liability is worked out.

    End of example

    How to lodge or amend a tax return

    If you are from a non-discrimination article (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.

    Using a tax agent

    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.

    2021–22 and future year tax return lodgments

    If you choose to lodge an individual 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 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 working holiday maker (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).

    2020–21 and prior income years

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

    Not previously lodged a 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 prior year 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 write:

    • the words 'Schedule of additional information – item A4'
    • the word Addy (to help identify this lodgment)
    • your name, tax file number and addresses (both your current address and former address used whilst you were in Australia)
    • 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 a 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:

    Time limit for amendment or objection

    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-sourced income to include
    • 4 years if you do have foreign-sourced 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.

    Amendment – 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:

    • the word 'Addy' (to assist in identifying the amendment request)
    • your nationality
    • information that you are a resident for taxation purposes in Australia, including that you:  
      • have been present in Australia for at least 6 months
      • intend to stay in Australia longer term.

    Without this information your request may be finalised based on the information we have available.

    Objection – information to provide

    If the time limit has passed you will need to lodge an objection and an extension of time request setting out why the objection was not lodged within the time limit. Stating that you were waiting for the outcome of the Addy case is sufficient for this purpose.

    As part of your request, you should include:

    • details of any foreign-sourced income that was not declared on your original income tax return
    • the word 'Addy' (to assist in identifying the amendment request)
    • your nationality
    • information showing you are an Australian resident for tax purposes – including  
      • 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
      • any further relevant information.

    To find out more about further relevant information you can provide, see this list of documents and information to assist you in providing further relevant detail about whether you are a resident of Australia for tax purposes.

    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 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%. To change this, you can lodge a tax return or PAYG withholding variation.

    Tax return

    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.

    PAYG withholding variation

    You can vary your PAYG withholding the rate or amount of withholding your employer withholds from your salary or wages if both of the following apply:

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

    You do this by completing a apply for a variation to vary.

    However, we can only consider a variation 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 1 of the 2 immediately preceding income years
    • in a private ruling by quoting the authorisation number of that ruling.

    For us to process your PAYG withholding variation application, you must include the following when you apply:

    • Select reason code 12A2 ‘Other reasons – excess withholding’.
    • In the free text field, input ‘WHM’ and information that relates to your residency – as examples  
      • ‘residency based on prior income tax assessment'
      • 'private ruling authorisation number <insert number>'.

    Return to top

      Last modified: 31 Mar 2022QC 67532