Changes to the ‘backpacker tax’

Editor: the ATO has posted the following on its website on its Small business newsroom.

Members will note that the date for registering with the ATO is 31 January, so any clients that haven’t registered by the time you see this should do so immediately.

From 1 January 2017, tax rates will change for working holiday makers who are in Australia on a 417 or 462 visa. These rates are known as working holiday maker tax rates.

What does this mean for you?

If you employ a working holiday maker in Australia 417 or 462 visa, from 1 January 2017, you should withhold 15% from every dollar earned up to $37,000 with foreign resident tax rates applying from $37,001.

You must register with us by 31 January 2017 to withhold at the working holiday maker tax rate.

If you already employ working holiday makers you will need to issue two payment summaries (with different rates) this year- one for the period to 31 December 2016 and a second for any period from 1 January 2017.

If you don’t register, you will need to withhold at the foreign resident tax rate of 32.5%

Penalties ay apply if you employ holiday makers but don’t register.

Ref: ATO Small business newsroom

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