Employing Working Holiday Makers – What Employers Need to Know
On the 1st January 2017, the Australian Government imposed a fixed tax rate for employing working holiday makers. One year later, it appears that a large proportion of employers are either unaware of the fixed tax rate or the requirement to register as employers of working holiday-makers.
In a timely update, our friends at DNM Group have written a brief summary, on what employers need to know.
Who does this apply to?
All employers now have an obligation to check employees Visa details and register with the ATO if they employ or plan to employ anyone with a 417 or 462 Visa.
How do we check a visa?
In order to check if an employee holds either a 417 or 462 visa, you can use the Visa Entitlement Verification Online (VEVO) system or ask the worker to provide a copy of their current visa.
How do you register?
Prior to making any payments to these employees, the employer must register with the ATO as a Working Holiday Maker Employer and must currently be registered for PAYG (pay as you go) withholding tax. Noting that penalties can be imposed by the ATO for failure to register.
Registration as a Working Holiday Maker Employer can be done online by completing the ATO registration form on their website. Noting that to register online all you will need is your ABN or withholding payer number and some contact details.
What is the tax rate?
Employers only need to register once as an employer of working holiday-makers and once registered must withhold tax at a rate of 15% from the first dollar earned by the employee up to $37,000 regardless of residency status.
Every dollar earned over $37,000 by the holiday-maker will be taxed at foreign resident PAYG withholding rates.
What if we don’t register?
If you as an employer fail to register prior to employing and making payments to a working holiday-maker, you must withhold tax at a rate of 32.5% for income earned up to $87,000 and use foreign resident tax rates for income earned over $87,000.
There are also penalties that can be imposed for non-registration as well as not withholding the correct amount of tax.
If your business requires specialist advice about employing working holidaymakers or related immigration legal advice, please contact our office to speak to one of our immigration lawyers.