Employers of working holidaymakers have special tax withholding requirements. If you are one, you should know the new tax rules, especially if you have employed them after 1 January 2017.
Starting 1 January, the 15% working holiday makers tax rate applies from the first earned dollar, no matter what their residency status is.
The employers are now required to register with the use of the “working holiday maker employer registration tool” found on the official ATO website.
The 15% tax rate applies to salary and wages paid from 1 January 2017 only.
Employers who do not register have to use the foreign resident withholding rates which start at 32.5% for the first $37,000. There will be penalties for those who fail to register.
Starting March 2017, payment summaries have been updated to show a box for employers to declare what type of payment mode they use for working holiday makers, indicated by “H.”
Working holiday makers who were employed before and after 1 January 2017 would need two payment summaries as these periods will be taxed differently. The first summary will cover the 1 July to 31 December 2016 period while the second one will cover the 1 January to 30 June 2017 period.
If you are the employer, remember to register and withhold tax at the working holiday maker tax rate before you make the working holiday maker’s first payment. For more information about taxes in Australia, contact a Specialist to discuss your particular circumstances.
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Chan & Naylor Group has national offices in Brisbane and Capalaba in Queensland, Melbourne and Moonee Ponds in Victoria, East Perth in Western Australia, and Bankstown, Parramatta, Pymble, North Sydney, and Sydney in New South Wales where we can assist you with your tax withholding requirements.