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  • Working holiday makers

    If you work in Australia, tax will be withheld from your pay and you may need to lodge a tax return each year. The requirement to lodge a tax return will depend on how much income you have earned during the year.

    The Australian income year starts on 1 July and ends on 30 June the following year.

    As a working holiday maker, your income is taxed at 15% for:

    • the first $37,000 – for 2019–20 and earlier income years
    • the first $45,000 – for 2020–21 and later income years.

    The balance of your income is taxed at ordinary rates.

    You are a working holiday maker if you have a visa subclass of either:

    • 417 (Working Holiday)
    • 462 (Work and Holiday).

    You can check your visa status using the Visa Entitlement Verification Online systemExternal Link.

    As a working holiday maker, your employer also has to pay superannuation for you if you are an eligible employee. When you leave Australia, you can apply to have your super paid to you 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%.

    On this page:

    Australian resident or foreign resident

    Most people who come to Australia for a working holiday or to visit are foreign residents for tax purposes. This includes people on visa subclass 417 (Working Holiday) or 462 (Work and Holiday) (backpackers).

    Taxation of working holiday makers

    On 6 August 2020, the Full Federal Court handed down its decision in Commissioner of Taxation v AddyExternal Link in favour of the Commissioner.

    This case was about whether an individual who entered Australia as a working holiday maker was:

    • a resident of Australia for tax purposes
    • required to pay tax at the minimum 15% rate applying to working holiday maker income or at the rates that otherwise apply more generally to Australian residents (which incorporates the tax-free threshold).

    What this means for you

    Working holiday maker income tax rates will continue to apply at the 15% rate (whether you are a resident or not). You do not need to lodge a tax return or a non-lodgment advice if all of the following apply:

    • All of the income you earn was as salary and wages while you were a working holiday maker.
    • The total of your 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.
       

    Employers must apply the pay as you go (PAYG) withholding tax rate in accordance with your tax file number declaration. If you identify as an Australian resident for tax purposes, and our records show you are a working holiday maker, we will notify your employer (and you) of your status. We will also advise your employer to apply the relevant tax rate.

    See also:

    Applying for a tax file number

    If you plan to work in Australia, you need a tax file number (TFN). Your TFN is your personal reference number in our tax system. You can apply for a TFN online once you have your work visa, such as a 417 (Working Holiday) or 462 (Work and Holiday) visa.

    You don't have to have a TFN, but without one you pay more tax.

    See also:

    Starting work – TFN declaration

    When you start work, you give your employer a Tax file number declaration. This helps the employer work out how much tax to withhold from your pay.

    Your employer will check if you have a visa subclass 417 (Working Holiday) or 462 (Work and Holiday), but you should tell them anyway to ensure they tax you correctly.

    Your employer is required to register with us as an employer of working holiday makers. Working holiday makers do not register.

    If your employer is registered with us, they will withhold tax from your pay at 15% on the first:

    • $37,000 of income for 2019–20 and earlier income years
    • $45,000 for 2020–21 and later income years.

    Example – working for a registered employer

    Gorge is on a 417 Working Holiday visa and starts working for Paul's Pickles. As Paul is a registered employer of working holiday makers, 15% tax is withheld from Gorge's pay.

    Gorge's tax withheld is calculated as follows:

    Gorge's pay × 15% = tax withheld

    $500 × 15% = $75

    Gorge earns $500 in the first week and has $75 tax withheld.

    End of example

    If your employer is not registered with us as an employer of working holiday makers, they must withhold tax from your pay using foreign resident tax rates. Foreign resident tax rates start at 32.5%.

    Example – working for an employer that has not registered

    Aleks is on a 417 Working Holiday visa and starts working for Pamela's Berries. As Pamela is not registered as an employer of working holiday makers, Pamela withholds tax at the foreign resident tax rates starting at 32.5%

    Alek's tax withheld is calculated as follows:

    Aleks's pay × 32.5% = tax withheld

    $500 × 32.5% = $162.50

    Aleks earns $500 in the first week and has $162.50 tax withheld.

    End of example

    Workplace rights as a working holiday maker

    Everyone working in Australia has the same workplace rights under the National Employment Standards, including if they are a working holiday maker.

    The national minimum wage and National Employment Standards (NES) make up the minimum employment entitlements that must be provided to all employees.

    See also:

    Finishing work – income statement

    Through Single Touch Payroll (STP), you will be able to see your year-to-date tax and super information in myGov. It will show the amount you earned, tax withheld and superannuation that has been paid. You will see the information by logging in to myGov and accessing ATO online services.

    Your employer is no longer required to give you an end-of-year payment summary. But, if they do, the payment summary will be available in myGov, along with your income statement.

    The information on your income statement or payment summary will help you to work out if you need to lodge a tax return, and if you do, complete your tax return.

    See also:

    Lodging a tax return

    The Australian income year ends on 30 June each year.

    You do not need to lodge a tax return or a non-lodgment advice if both of the following apply:

    • All of your income was earned as salary and wages while you were a working holiday maker.
    • The total of your taxable income for the income year was less than
      • $37,001 for 2019–20 and earlier income years
      • $45,001 for 2020–21 and later income years.
       

    You are required to lodge a tax return if either of the following applies:

    • Your taxable income for the year was more than  
      • $37,000 for 2019–20 and earlier income years
      • $45,000 for 2020–21 and later income years.
       
    • You carried on a business.

    You will need to lodge a tax return if you wish to claim any deductions.

    If you leave Australia permanently before 30 June, you can lodge your tax return early.

    When you lodge a tax return, we work out how much tax you should have paid, based on your actual income for the year. If too much was withheld from your pay, we will refund the difference to you. If you have not paid enough, we will send you a bill.

    Example – income below $45,001 for 2020–21 and later income years

    Louie lives in Belgium and is planning a working holiday in Australia.

    In preparation for his trip, Louie applies for a TFN, indicating that he is not an Australian resident for tax purposes. He is granted a 417 visa before his arrival in Australia.

    On 10 January 2021, Louie starts work with Bob's Mango Farm in Far North Queensland. As part of the normal employment process, Louie gives Bob his completed tax file number declaration and tells him that he is a working holiday maker on a 417 visa.

    As Bob is a registered employer with us, the first $45,000 of Louie's income is taxed at 15%.

    Louie is paid weekly and earns $100 a day. After five days of work, Louie receives his first pay of $500, from which $75 tax is withheld and sent to us.

    Louie's tax withheld is calculated as follows:

    Louie's daily pay × 15% = tax withheld

    $100 × 15% = $15.

    Louie's total tax withheld is calculated as follows:

    Days worked × tax withheld per day = total tax withheld

    5 days × $15 = $75.

    Louie finishes working for Bob in April after earning a total of $6,000. Louie's income statement shows he earned a total of $6,000 and had $900 tax withheld.

    As Louie's total taxable income for the year is below $45,001, he isn't required to lodge a tax return for the 2020–21 income year.

    End of example

    Tax comparison

    The working holiday maker tax rate is different to the tax rate for Australian residents.

    The working holiday maker tax rate is 15% until you earn:

    • $37,000 for 2019–20 and earlier income years
    • $45,000 for 2020–21 and later income years.

    Australian resident taxpayers get the first $18,200 tax free (known as the tax-free threshold). They then pay 19% until they earn $37,000 (2019–20 and earlier income years) or $45,000 (2020–21 and later income years).

    Our individual income tax rate page shows the most up-to-date rates and thresholds. Australian residents, foreign residents and working holiday makers pay the same tax rates on income over $37,000 (2019–20 and earlier income years) or $45,000 (2020–21 and later income years).

    The following examples show how this works, and the key differences between working holiday makers and Australian residents.

    Example – tax for working holiday maker 2020–21 and later income years

    Klaus is a German backpacker on a 417 visa and earns $45,000 in the 2020–21 income year.

    Klaus pays 15% of his income in tax:

    $45,000 × 15% = $6,750.

    Klaus:

    • does not pay the Medicare levy (he is not entitled to use the Medicare system)
    • is not entitled to the low income tax offset (as a foreign resident).

    In total, Klaus pays $6,750 tax.

    End of example

     

    Example – tax for Australian resident

    Richelle is an Australian resident. She earns $45,000 in the 2020–21 income year.

    Richelle gets the first $18,200 of her income tax-free. She pays 19% tax on the income between $18,200 and $45,000.

    That works out to be:

    (Total income − tax-free threshold) × tax rate = tax withheld

    ($45,000 − $18,200) × 19% = $5,092.

    In addition, Richelle also:

    • pays the Medicare levy of 2%
      • $45,000 × 2% = $900
       
    • is entitled to a credit for the low income tax offset
      • $375.
       
    • is entitled to a credit for the low and middle income tax offset:  
      • $855
       

    In total, Richelle pays $5,092 + $900 − $375 − $855 = $4,762 tax.

    End of example

    The Medicare levy

    Most working holiday makers are foreign resident taxpayers. Foreign resident taxpayers do not pay the Medicare levy.

    If, in your circumstances, you determine that you are an Australian resident for tax purposes then you may be liable to pay the Medicare levy.

    Australia has reciprocal health agreements with the following countries:

    • Belgium
    • Finland
    • Italy
    • Malta
    • Netherlands
    • New Zealand
    • Norway
    • Republic of Ireland
    • Slovenia
    • Sweden
    • United Kingdom.

    If you come from one of these countries and you are an Australian resident for tax purposes, you will be liable to pay the Medicare levy.

    Example – income over $45,000

    Ian is a working holiday maker from the UK. His circumstances mean that he is an Australian resident for the whole 2020–21 income year. He has no dependants.

    Ian is liable to pay the Medicare levy as Australia has a reciprocal health agreement with the UK.

    Ian earns a total of $50,000 in the 2020–21 income year.

    Ian is taxed at 15% on the first $45,000 he earns as a working holiday maker. The remaining $5,000 is taxed at 32.5%.

    Ian's tax and Medicare levy are calculated as follows:

    $45,000 × 15% = $6,750

    $5,000 × 32.5% = $1,625.

    Total tax on taxable income:

    $6,750 + $1,625 = $8,375.

    Medicare levy on taxable income:

    $50,000 × 2% = $1,000.

    Low income tax offset:

    $250

    Low and middle income tax offset

    $1,080

    In total, the amount of tax Ian pays is $8,045, calculated as:

    $8,375 + $1,000 − $250 − $1,080 = $8,045.

    End of example

    Departing Australia superannuation payments (DASP)

    Employers are required to make super contributions on behalf of their eligible employees to fund retirement.

    If you worked and earned super as a working holiday maker, your super will be taxed at 65% when it is paid to you. This DASP tax rate for working holiday makers is effective from 1 July 2017.

    You can apply for the DASP after you leave Australia if you meet all requirements.

    See also:

    Last modified: 01 Jul 2021QC 50742