14 June 2017

 

Australian Backpacker Tax

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Australia is a beautiful country that offers a friendly, relaxed lifestyle for

backpackers on a working holiday visa. While you enjoy this experience,

please also ensure you understand and comply with the backpacker tax

rules that apply to your individual circumstances. Platinum Accounting

Brisbane is a registered tax agent with the ATO and can advise you on your

backpacker tax obligations.

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What is the backpacker tax?

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Backpacker tax is the tax working holiday makers pay when living and

earning an income in Australia. This is applicable if you hold a 417 or

462 visa (known as the ‘backpacker tax’).

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Backpacker tax rates

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From the 1 January 2017, the backpacker tax rates have changed. Previously, subject to certain eligibility requirements, workers on a 417 or 462 visa could be classed as a ‘resident for tax purposes’ and would therefore be eligible for the tax free threshold. This is no longer the case. From 1 January 2017, holiday workers on a 417 or 462 visa, must lodge a non-resident 2017 tax return and pay tax at 15% of every dollar earned up to $37,000 with foreign resident tax rates applying from $37,001.

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Are you a backpacker working in Australia?

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With the change in tax law part way through the tax year, this has several implications in calculating a ‘backpacker’ 2016/2017 tax return. The tax rates will be different on each amount of income earned prior to, and after, 1 January 2017. Further, Medicare levy tax may not be imposed and the low income tax offset will no longer be applicable to workers on a 417 or 462 visa.

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Reduce your backpacker tax payable

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If a working holiday maker on a 417 or 462 visa was previously eligible as a ‘resident for tax purposes’ prior to 1 January 2017, they may apply their $18,200 tax free threshold to any income earned prior to 1 January 2017. Accordingly, holiday workers should be provided with two Payment Summaries from their employer separating the income earned in each period.

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