Andy Hutt and Rohan Frame outline some considerations for employers regarding the new Backpacker Tax.
After much political negotiation, the working holiday makers tax ‘Backpacker Tax’ came into effect on 1 January 2017. Individuals present in Australia on 417 or 462 visas (being working holiday visas for people between 18 and 31 years old) as well as individuals on bridging visas, are subject to the new working holiday maker tax rates.
Such taxpayers will be subject to 15 percent tax on their first $37,000 of taxable income, after which they will be subject to the current resident income tax bands and rates. If, however, the taxpayer has not quoted their Tax File Number (TFN) they will be subject to 47 percent tax on all earnings.