Income Tax Rates Amendment (Working Holiday Maker Reform) Act (No. 2) 2016 (92 of 2016)

Schedule 1   Amendments

Part 1   Amendments

Income Tax Rates Act 1986

6   At the end of Part II of Schedule 7

Add:

4. If the non-resident taxpayer is a working holiday maker at any time during the year of income:

(a) count the taxpayer's working holiday taxable income for the year of income as the first parts (starting from $0) of the taxpayer's ordinary taxable income for the purposes of the table in clause 1; and

(b) do not apply the rates in that table to that working holiday taxable income; and

(c) do not count that working holiday taxable income when working out the taxpayer's taxable income for the purposes of clause 2 or 3.

Note: The rates for the taxpayer's working holiday taxable income for the year of income are set out in Part III.

Example: Rosie earns a $60,000 salary while a working holiday maker from 1 July 2017 to 31 March 2018. She also earns $29,000 while holding a different class of visa from 1 April 2018 to 30 June 2018.

The $60,000 salary is Rosie's working holiday taxable income and is the first part of her ordinary taxable income. Under Part III, she pays tax at the rate of 15% on $37,000 of that salary, and tax at the rate of 32.5% on the remaining $23,000 of that salary.

The $29,000 income makes up the remaining parts of Rosie's ordinary taxable income. Under clause 1 of this Part, she pays tax at the rate of 32.5% on $27,000 of that income, and tax at the rate of 37% on the remaining $2,000 of that income.