Before you employ working holiday makers, make sure you are aware of the specific requirements by the ATO when it comes to registering as employers and withholding correct Pay As You Go (PAYG) withholding tax!
Who are Working Holiday Makers (WHMs)?
Employees holding the following visas are classified as WHMs:
- Working Holiday Visa (subclass 417)
- Work and Holiday Visa (Subclass 462)
How can you check a visa?
Checking if an employee holds either a 417 or 462 visa can be easily done using the Visa Entitlement Verification Online (VEVO) (link below) or alternatively requesting a current visa copy from the employee.
How can you register?
Prior to making any payments to WHM, the employer must register with the ATO as a Working Holiday Maker Employer and must currently be registered for PAYG withholding tax.
To register, you have to complete the ATO registration form (link below). All you need is your ABN or WPN (Withholding Payer Number) and some contact details.
Please note, employers only need to register ONCE as an employer of WHMs.
What is the tax rate?
Employers will withhold tax at a rate of 15% for the first:
- $37,000 earned during 2019–20 and earlier income years
- $45,000 earned during 2020–21 and later income years.
Higher withholding rates will apply above these thresholds. And also, make sure a TFN is provided by the WHMs, because if not, you need to withhold tax at the top rate.
| Taxable income | Tax on this income |
|---|---|
| 0 – $45,000 | 15c for each $1 |
| $45,001 – $135,000 | $6,750 plus 30c for each $1 over $45,000 |
| $135,001 – $190,000 | $33,750 plus 37c for each $1 over $135,000 |
| $190,001 and over | $54,100 plus 45c for each $1 over $190,000 |
What if you don’t register?
If you fail to register prior to employing and making payments to WHMs, you must withhold tax at a rate of 32.5% from every dollar earned up to $120,000. For income over $120,000, you must apply foreign resident withholding rates (link below).
Do note that penalties may apply for non-registration as well as not withholding correct amount of tax!
Useful links:
VEVO Check:
Employer registration for working holiday maker:
https://www.ato.gov.au/single-page-applications/whmregistration
Foreign resident withholding rates:
https://www.ato.gov.au/tax-rates-and-codes/tax-rates-foreign-residents
Author
May Aung
