Working holiday makers (WHMs) are temporary visitors to Australia who hold a Working Holiday visa (subclass 417) or Work and Holiday visa (subclass 462).
Tax rate for working holiday makers
A special tax rate applies when you employ a WHM. However, WHMs are entitled to the same superannuation benefits as other employees.
To employ a WHM in Australia on a visa subclass 417 or 462, you must:
- register with us as an employer of WHMs to withhold tax at the WHM tax rate (before making your first payment to them)
- check your worker's visa status using the Visa Entitlement Verification OnlineExternal Link service.
Penalties may apply if you fail to register.
You should not employ, or pay someone for work, if they don’t have permission to work in Australia.
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.
In this section
- Registered employers
- Unregistered employers
- Employing WHMs as contractors
- Payment summaries
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 this.
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 WHM tax table, unless you receive a PAYG variation notice from us for a particular individual WHM.
If a worker questions you about the tax treatment of their payments, you may refer them to our website ato.gov.au/WHM
If you're not registered with us as an employer of WHMs, you must withhold tax at 32.5% from every dollar earned up to $120,000. For income over $120,000, 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.
WHMs are entitled to superannuation on the same basis as other employees. WHMs can apply to have this super paid back to them as a Departing Australia superannuation payment (DASP) when they leave Australia.
If your arrangement with your WHM means they're an employee, you must tax them using the WHM tax table even if they provide you with an ABN.
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.
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 our website ato.gov.au/WHMWhat you need to do as an employer of working holiday makers (backpackers) holding a Working Holiday visa (subclass 417) or Work and Holiday visa (subclass 462).