BACKPACKERS TAX REGISTRATION DEADLINE EXTENDED FOR EMPLOYERS

The following has been sourced from the Thomson Reuters Weekly Tax Bulletin, Issue 2, 13 January 2017:

The ATO has advised that employer registration re working holiday makers has been extended to 31 January 2017. Employers employing working holiday makers will not be penalised as long as they register by 31 January 2017. They can still use the new withholding tax rate of 15% from 1 January 2017.

Anybody can hire a working holiday maker, especially where there is a need for labour for a short period of time. Agriculture, hospitality, construction and domestic services often use working holiday makers, or backpackers, to meet this demand. Working holiday makers hold a visa subclass 417 or 462 that allows them to work while in Australia.

From 1 January 2017, the working holiday maker tax rate of 15% applies from the first dollar earned. They cannot claim the tax-free-threshold regardless of their residency status and must provide a TFN, otherwise the employer needs to withhold at the top rate of tax.

Once employers register, a withholding rate of 15% applies to the first $37,000 of a working holiday maker's income. From $37,001, normal foreign resident withholding rates apply. If employers do not register, they must withhold tax at 32.5% for the first $37,000 of a working holiday maker's income. From $37,001, normal foreign resident withholding rates apply. Penalties may apply for failing to register.

by Terry Hayes

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