If you are looking to spend time in Australia on a working holiday visa then you may have questions about the tax you will pay on any earnings. We’re providing this article to help answer the most common Working holiday Visa tax questions from questions related to getting your tax back to confirmation of the current tax rates for working holiday visa holders.
To start with, to work in Australia on a working holiday visa, you will need to have a Tax File Number (TFN). This number is used as your identification with the Australian Tax Office (ATO). As soon as you arrive in Australia, you should apply for your TFN as you will need to provide it to your employer when starting a new job so the ATO can collect tax on your pay. This tax is collected directly from each salary you receive and it will appear on your paychecks, under the title of “PAYG” or PAYG Withholding” or similar.
Companies must register as employers of working holiday makers by completing a specific form. Make sure that your employer has registered you as a working holiday visa holder; otherwise, your working holiday tax rate will be taxed 32.5% (foreign resident rate) for your first $45,000 you earn.
Working Holiday Tax Rates For Working Holiday Visa Makers
Backpackers with a working holiday 417 or a 462 visa are under a specific tax system with all working holiday visas makers taxed at 15% of their income up to the first $45,000.
Before legislation changes to WHV tax a number of years ago, backpackers could claim residency for tax purposes if they were staying in one place for six months. Since January 2017 however, working holidaymakers are treated as foreign residents which means that backpackers and working holiday visa holders can no longer claim a tax-free threshold as Australian residents. 😒
What Is The Tax Year in Australia?
The tax year in Australia follows the Australian financial year. The Australian financial year runs from 1st July to 30th June each year. WHV Tax returns can be lodged any time from 1st July to 31st October, for the previous financial year. If you do not lodge your tax return within this time frame, you may receive a penalty.
Do I Get All My Tax Back On A Working Holiday Visa?
You used to be allowed to work up to six months for each employer on a working holiday visa in Australia. As a non-resident, you were able to earn up to $18,200 tax-free!
Unfortunately, the Australian government recognised this as a loophole and quickly closed it resulting in working holiday visa holders paying tax from the first dollar they earned.
With that said, there are ways to get some the tax you paid back. Suppose you incurred work-related expenses or made charitable donations during your time in Australia. In that case, you can look to get your tax back on a working holiday visa by lodging a tax return.
Working Holiday Visa Tax Return
There are three options to get your working holiday visa tax back, all involve using a working holiday visa tax return.
Working Holiday Tax return using a Tax Agent
A tax agent can help make sure you get all the money that is rightfully yours. If you want to maximise your tax returns or hate paperwork, you could use a tax agent. This takes a lot of hassle out of the process and can help to maximise your refund. They do charge for this service and you can expect to pay between $50 – $150 to have your working holiday tax return completed for you by a tax agent.
DIY Tax Return Completed Online
The Australia Tax Office (ATO) enables you to prepare and lodge your tax return online. This is a free service and is as safe and secure as using a government website can be.
If you have a simple return, for example, if you had only one employer and have your PAYG or final payslip, this could be the option for you.
DIY Tax Return by traditional Mail / Post
You can use a paper tax return to complete your tax return and lodge it by mail. The paper tax returns include instructions that explain how to fill out your tax return, section by section. This method is perfect for simple returns (as above) or for those who do not have access to a computer.
Paper copies for completion are available at newsagents (between July and October), ATO’s shopfronts or by phoning the ATO’s Publications Distribution Service on 1300 720 092.
Can I Claim The Tax-free Threshold On A Working Holiday Visa?
A tax-free threshold is an amount of money that can be earned each financial year without needing to pay tax. Suppose you’re an Australian resident for tax purposes. In that case, the tax-free threshold is currently $18,200, meaning the first $18,200 of your income for the financial year is tax-free, and you only pay tax if you earn above this amount.
Unfortunately, regardless of your working holiday visa type, you are generally deemed a resident for tax purposes in Australia.
Though Working Holidaymakers were once able to claim a tax-free threshold, the Australian government recognised this as a gap (a.k.a another potential moneymaker). This means that the official line is that Working holidaymakers can’t claim the tax-free threshold and must provide their tax file number (TFN) if you are looking to earn a salary while spending time in Australia.
Can I Have An ABN On A Working Holiday Visa?
Like a Tax File Number (TFN), an Australian Business Number or (ABN) is a unique number (11 digits) which allows you to be identified for tax purposes. An ABN is required for businesses operating within Australia.
You cannot apply for an ABN without first having a TFN. If you are asking if you can have an ABN on a working holiday Visa? The simple answer is Yes.
Remember, however, the working holiday visa is really meant for those looking to pick up casual work to finance your time in Australia. Yet, with the introduction of companies such as UberEATS, Menulog, Deliveroo, Postmates and other casual delivery services, we have seen several working holiday visa holders set up ABNS so they can work for these companies as independent contractors.
Do Working Holidaymakers Get Their Tax Back?
As mentioned previously, several years ago, the Federal Government changed the tax rules that apply to backpackers. Before these changes, all visitors from partner countries to the ‘Working Holiday Maker’ program could apply for a holiday visa. With these visas travellers were effectively working and paying tax in the same way that Australian citizens were.
It was a generous scheme because Australian citizens generally do not pay any tax on the first $18,200 earned. This meant backpackers earning below this amount, could claim back any tax they paid during the year on their return. Unfortunately, however, these golden days are over.
The new ‘Backpacker Tax’ stills give preferential treatment to WHV visitors when taxing their income. The tax rate is a flat 15% for the first $45,000 of earnings. If you earn less than $45,000 per year during your working holiday in Australia, you are not legally required to file a tax return; however, you will still need to pay tax.
The only way that you could look to get some of your tax back is by claiming work-related expenses. These expenses will vary from person to person as they are specific to the job you were doing while you were working in Australia. Before you start claiming for expenses you haven’t strictly incurred, remember that in most cases, the tax department will be expecting receipts to provide evidence to support your claim.
Other Working Holiday Visa Tax Questions?
We hope you found our Working Holiday Visa Tax article of interest. If you still have any working Holiday Visa tax questions or any comments about this article, please feel free to comment below. With your comments or questions, we can build on the content of this article and make it even more helpful for everyone!
Other Getting Down Under Resources
You may find the following getting down under resources of use:
Apply for your TFN: Applying For Your Australian Tax File Number – How To Apply For Your TFN
Search for Working Holiday Jobs: Search Our Current Working Holiday Visa Job listings
Posts in our Working Holiday Visa Community Forum