Backpacker: Working holiday maker tax ; Foreign resident tax – Income tax 2017

WORKING HOLIDAY MAKERS (WHM) – INCOME TAX YEAR 2017

The following rates for 2016–17 apply from 1 January 2017, regardless of the working holiday maker’s residency status.
Taxable income Tax on this income
$0 – $37,000 15c for each $1
$37,001 – $87,000 $5,550 plus 32.5c for each $1 over $37,000
$87,001 – $180,000 $21,800 plus 37c for each $1 over $87,000
$180,001 and over $56,210 plus 45c for each $1 over $180,000

The above rates do not include the Temporary budget repair levy; this levy is payable at a rate of 2% for taxable incomes over $180,000.

WHM – SUPERANNUATION CHANGES

Working holiday makers leaving the country are able to apply to obtain any superannuation they earned.  paid to them under the Departing Australia Superannuation Payment (DASP)

After 1 July 2017, any DASP made will be taxed at 65% and this rate will apply to all superannuation earned before 1 July 2017.

Currently, the rate is 38% and is still in effect if you leave Australia and are paid your DASP before 1 July 2017.

 EMPLOYERS HIRING WHM

Businesses that hire working holiday makers are required to register with the ATO. This can be done online here. Registration has been extended to 31 January 2017.

Registered businesses will use the new backpacker tax rules from 1st January 2017 and withhold 15% tax of the first $37,000 of their employees’ working holiday maker income.

Employer should check that the worker has the correct visa using the Visa Entitlement Verification OnlineExternal Link service.

Unregistered businesses must withhold tax at 32.5% for the first $37,000 of a working holiday makers income, if the worker provides a TFN, or at 47%, if no TFN was provided. Working holiday makers who qualify for residency also cannot claim the tax-free threshold. Furthermore, penalties will apply to those who fail to register.

Penalties may apply if you fail to register.

Below is the new tax table for working holiday makers. You may find more information on calculating your workers’ taxes using this table here.

Taxable income Tax rate Value
$0–$37,000 15% on each $1 up to $37,000 0.15
$37,001–$87,000 32.5% on each $1 over $37,000 to $87,000 0.325
$87,001–$180,000 37% on each $1 over $87,000 to $180,000 0.37
$180,001 and over 47%* on each $1 over $180,000 0.47

WHM are not required to pay the Medicare levy.

* Includes the Temporary Budget Repair Levy of 2%.

WHM – PAYMENT SUMMARIES 2017

A payment summary for a WHM must identify income earned from 1 January 2017.

The employer needs to indicate ‘H‘ on the payment summary in the ‘gross payment type’ box. If your payment summary doesn’t have this box, then just put the letter ‘H’ next to the income earned by the working holiday maker.

Working holiday makers who worked for the same employer both before and after 1 January 2017 will need two payment summaries as these periods are taxed differently. The two payment summaries cover the following periods:

  • 1 July to 31 December 2016
  • 1 January to 30 June 2017.

If your software is unable to produce two records for a single employee, you may need to restart your worker as a ‘working holiday maker’ as at 1 January 2017. If you can’t produce electronic payment summaries, then you can use ATO paper forms.

Make sure the employment dates are accurate.

See also: PAYG payment summaries: forms and guidelines

“““““““““““““““““““““““““““““““““““““““““““““““““““`

FOREIGN RESIDENTS  –   INCOME TAX YEAR 2017

The following rates for 2016–17 apply from 1 July 2016.
Taxable income Tax on this income
0 – $87,000 32.5c for each $1
$87,001 – $180,000 $28,275 plus 37c for each $1 over $87,000
$180,001 and over* $62,685 plus 45c for each $1 over $180,000

Foreign residents are not required to pay the Medicare levy.

*The above rates do not include the Temporary Budget Repair Levy; this levy is payable at a rate of 2% for taxable incomes over $180,000.

error: Content is protected !!