June 8, 2017
Following the government changes brought down in January this year, it’s important to ensure the following for any backpackers or working holiday makers hired before 1 January 2017.
You’ll need to issue two payment summaries for any working holiday maker you employed both before and after 1 January:
- one for income earned up to 31 December 2016
- one for income earned from 1 January 2017 (using gross payments type H).
If you are considering hiring working holiday makers, there are three things you’ll need to do:
- Register with the ATO so you can withhold at the 15% tax rate – you only need to register once, not for every worker you employ.
- Check they have a visa that allows them to work in Australia.
- Withhold 15% from every dollar earned up to $37,000 – foreign resident tax rates apply from $37,001.
If you don’t register, not only will you need to withhold at the foreign resident tax rate of 32.5% from the first dollar your working holiday maker earns, but you might also be penalised.
Read more here, and as always if you have concerns please contact your accountant.