Tax rates for working holidaymakers
From 1 January 2017, as a working holiday maker the first $37,000 of your income is taxed at 15%, with the balance taxed at ordinary rates.
As a working holiday maker your employer also has to pay super for you if you are eligible. When you leave Australia you can apply to have your super paid to you as a Departing Australia Superannuation Payment (DASP). The tax on any DASP made to working holiday makers on or after 1 July 2017 is 65%.
When you lodge an income tax return, the ATO (Australian Tax Office) will work out how much tax you should have paid. If you paid too much, they will give you a refund. If you have not paid enough, they will send you a bill.
Resident for tax purposes
Am I a resident for tax purposes?
Tax on this income
0 – $18,200
$18,201 – $37,000
19c for each $1 over $18,200
$37,001 – $80,000
$3,572 plus 32,5c for each $1 over $37,000
$80,001 - $180,000
$17,547 plus 37c for each $1 over $80,000
If you've moved to Australia on a working holiday you can be deemed a resident for tax purposes if you:
- Have lived in Oz continuously for at least 6 months (183 days), and...
- Have been in one job and have lived in one single place for that whole time
If you go to Australia on a Working Holiday Maker visa, you may be given a non-resident Tax File Number (TFN) to start with. Having a non-resident TFN assigned to you at the start of your Australian stay does not mean you're a non-resident for tax purposes. Your work and living behaviour are the main criteria in your tax residency designation. You need to complete a one-page residency questionnaire when filing your tax return so that the correct designation can be identified.
Non-resident for tax purposes
Tax on this income
0 – $80,000
32,5c for each $1
$80,001 – $180,000
$26,000 plus 37c for each $1 over $80,000
$180,001 and over
$63,000 plus 45c for each $1 over $180,000
Labour hire arrangements
Some working holiday travellers are recruited in construction / harvesting industries under labour hire arrangements. In these instances the labour hire firm contracts with the worker and pays the worker. The worker is not an employee of the client and there is no contract between the worker and the client. The worker may or may not be an employee of the labour hire firm.
Under a labour hire arrangement, the labour hire firm will be required to withhold amounts from a payment made to the worker (at the normal salary and wages rates) and provide the worker with a PAYG payment summary – business and personal services - following the end of the financial year.
Tax file number declaration
Started work after 1 January 2017 – TFN declaration
Registered employers of working holiday makers will withhold tax from your pay at 15% on the first $37,000 of income.
If you work for an unregistered employer, they must withhold tax from your pay using foreign resident tax rates. Foreign resident tax rates apply a rate of 32.5% to the first $37,000 of income.
Started work before 1 January 2017 – TFN declaration
If you are already working for an employer before 1 January 2017 you will have given them a TFN declaration when you started. There is no need to give them a new TFN declaration, but you should tell them about your visa subclass anyway to ensure they tax you correctly.
If you are a classed as a resident for tax purposes, you do not pay tax on the first $18,200 of your income (this is known as the ‘tax-free threshold’). You can claim the tax-free threshold from only one payer at any one time.
Only income earned from 1 January 2017 is eligible for the working holiday maker tax rates. You will receive a separate payment summary for any income from this date.
Your employer will also report the details from the payment summary to the ATO.
Lodging a tax return
The Australian tax system runs from 1 July to 30 June. You are required to lodge a tax return to make sure you have paid the right amount of tax.
If you leave Australia permanently, you can lodge your tax return early.
When you lodge a tax return, we work out how much tax you should have paid based on your actual income for the year. If too much was withheld from your pay, we refund you the difference. If you have not paid enough, you will send you a bill.
We automatically apply the correct tax rates and thresholds based on the information you include in your income tax return.
Louie lives in Belgium and is planning a working holiday in Australia.
In preparation for his trip Louie applies for a TFN, indicating that he is not an Australian resident for tax purposes. He is granted a 417 visa before his arrival in Australia.
On 10 January 2017, Louie starts work with Bob's mango farm in Far North Queensland. As part of the normal employment process, Louie gives Bob a TFN Declaration and advises him that he is a working holiday maker on a 417 visa.
As Bob is a registered employer with the ATO, the first $37,000 of Louie's income is taxed at 15%.
Louie is paid weekly and earns $100 a day. After 5 days work, Louie receives his first pay of $500, from which $75 tax is withheld and sent to the ATO.
Louie finishes working for Bob in April after earning a total of $6,000. Bob gives Louie a payment summary showing he earned a total of $6,000 and had $1,140 tax withheld.
Before he leaves Australia, Louie lodges an income tax return showing his $6,000 income, tax withheld of $1,140 and $500 deductions related to his employment.
Once processed, Louie receives a Notice of Assessment showing a taxable income of $5,500 and a tax on taxable income of $1,045.
As Louie paid $1,140 in tax, he receives a refund of $95 paid directly to his bank account.
The working holiday maker tax rate is different to the tax rate for Australian residents.
The working holiday maker tax rate is 15% until you earn $37,000. You are then taxed at the same rate as Australian residents.
Australian resident taxpayers get the first $18,200 tax free (known as the tax free threshold), and then pay 19% until they earn $37,000.
Our Individual income tax rate page shows the most up to date rates and thresholds, including those above $37,000. Australian residents, Foreign residents and working holiday makers pay the same tax rates on income over $37,000.
The following examples will give you a good idea of how this works, and the key differences between working holiday makers and Australian residents.
Klaus is a German backpacker on a 417 visa and earned $37,000 between 1 January 2017 and 30 June 2017.
Klaus will pay 15% of his income in tax.
$37,000 x 15% = $5,550
does not pay the Medicare levy (he is not entitled to use the Medicare system)
is not entitled to the low income tax offset (as a foreign resident).
In total, Klaus will pay $5,550 tax.
Departing Australia Superannuation Payments
Employers are required to make super contributions on behalf of their employees to fund retirement.
If you worked and earned super while visiting Australia on a temporary visa, you can apply to have this money paid to you as a Departing Australia Superannuation Payment (DASP).
As a working holiday maker, any departing Australia super payment made on or after 1 July 2017 is taxed at 65%.