14 June 2017
Australian Backpacker Tax
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.
What is the backpacker tax?
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’).
Backpacker tax rates
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.
Are you a backpacker working in Australia?
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.
Reduce your backpacker tax payable
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.