• Employers of working holiday makers

    Any employer can hire a working holiday maker, especially when they need labour for a short period of time. You can identify a working holiday maker as they will hold a Working Holiday visa (subclass 417) or Work and Holiday visa (subclass 462).

    Working holiday makers are taxed at 15% from the first dollar earned, regardless of their residency status. Working holiday makers can't claim the tax-free threshold and must provide you with their tax file number (TFN). If they don't, you need to withhold tax at the top rate (see Individual income tax rates).

    Working holiday makers are entitled to superannuation, if they are eligible.

    You should not employ or pay someone for work if they don’t have permission to work in Australia.

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    What you need to do

    To employ a working holiday maker in Australia on a visa subclass 417 or 462, you:

    • should check your worker has the correct visa using the Visa Entitlement Verification OnlineExternal Link service
    • must register with us to withhold tax at the working holiday maker tax rate before making your first payment to them. Penalties may apply if you fail to register.

    Someone can claim they are an Australian resident for tax purposes to obtain the tax-free threshold. However, the tax rate of 15% will override their selection if they are working in Australia on visa subclass 417 or 462.

    How to register

    Only employers of working holiday makers need to register by using the registration tool.

    Before you register, you must be registered for pay as you go (PAYG) withholding or a withholding payer number.

    Working holiday maker employer registration tool

    You should print a copy of the registration confirmation screen for your records or phone 13 28 66 to confirm your registration.

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    How to tax a working holiday maker

    Once you register, you withhold 15% from every dollar earned up to $37,000 with foreign resident withholding rates applying to income over $37,000.

    If you don't register, you 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.

    You can use the Employee/contractor decision tool to work out if your worker is an employee or contractor for tax and super purposes. If the tool shows they are an employee you must tax them at working holiday maker tax rates even if they provide you an ABN.

    Penalties apply if you employ someone with visa subclass 417 or 462 but don't register as an employer of working holiday makers.

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    Payment summaries

    To make sure working holiday makers are taxed correctly, a payment summary must identify income earned by a working holiday maker from 1 January 2017.

    For payments to a working holiday maker, you need to indicate 'H' on the payment summary in the 'gross payment type' box. If your payment summary doesn't have this box, then just put the letter 'H' next to the income earned by the working holiday maker. This is to help your worker to prepare their income tax return.

    Working holiday makers who worked for you both before and after 1 January 2017 will need two payment summaries as these periods are taxed differently. The two payment summaries cover the following periods:

    • 1 July to 31 December 2016
    • 1 January to 30 June 2017.

    If your software is unable to produce two records for a single employee, you may need to restart your worker as a 'working holiday maker' as at 1 January 2017. If you can't produce electronic payment summaries, then you can use ATO paper forms.

    If you're not sure, talk to your software provider about your options when issuing payment summaries.

    Make sure the employment dates are accurate.

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      Last modified: 29 May 2017QC 50741