Australia’s Working Holiday Visas offer a great opportunity to travel our beautiful country while supporting yourself financially through short-term employment. And while there are a variety of employment opportunities available, it’s important that you’re aware of what you can be paid and how much tax you should pay.
On 1 January 2017, tax rates changed for working holiday makers who are in Australia on 417 visas. If you’re currently employed on a 417 visa, here are some things you need to know.
Are you receiving the correct tax rates?
If you’re employed on a working holiday 417 visa you should only pay 15% tax on every dollar you earn, up to $37,000. After that you will then pay 32.5% tax on each dollar that you earn, up to $87,000.
What may actually be happening, is that you are being taxed 32.5% from the very first dollar you earn – missing out on the reduced tax rate.
If you pay more tax than is necessary you will receive any amount you over-pay when you claim your tax return at the end of the financial year. However, this higher tax rate results in a significant reduction in your weekly, fortnightly or monthly pay – and it’s a cash flow problem that you can avoid.
What you should do
Do your research
Since the tax rate change was introduced, employers of holiday makers need to complete a one-off registration with the ATO so they can withhold the correct amount of tax.
If you’re currently seeking employment you should make sure any potential employers are registered with the ATO to hire workers on 417 visas. If they aren’t, you won’t be eligible to charge the 15% tax rate, and will instead need to charge you 32.5% from the first $1 you earn.
Speak to your current employer
If you’re currently employed on a 417 visa, speak to your employer to make sure you’re receiving the right tax rates.
While your employer should check if your visa status (and then tax you accordingly), it’s a good idea to have a conversation about the tax rates that you’re entitled to.
Make sure you have a Tax File Number
When you travel on a working holiday visa you aren’t legally required to hold a Tax File Number, but you should. You will pay significantly less tax if you have one so it’s really important that you organise this before you start working.
Find out more about the tax income rates for working holiday makers for 2016-2017.
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