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From 1 January 2017, tax rates will change for working holiday makers who are in Australia on a 417 or 462 visa (the 'backpacker tax').

Under this new tax rate, you should withhold 15% from every dollar earned by a working holiday maker up to $37,000 with foreign resident tax rates applying from $37,001.

Registering with the ATO

You must register by 31 January 2017 to use this rate and avoid penalties. As long as you register in time, you can still use the new withholding tax rate of 15% from January 2017. Register from the ATO website

How to withhold the working holiday maker tax

We're working on a tax table update that includes this rate for MYOB Essentials. In the meantime, here's a helpful workaround to record this new tax for your MYOB Essentials business.

Setting up the tax rate

Before paying a working holiday maker, you need to set up the 15% tax rate for each working holiday maker.

  1. Go to the Employees screen (Payroll > Employees) and click the name of a working holiday maker.
  2. Go to the Tax tab.
  3. Check the box for Approved withholding variation, and enter 15 in the percentage box.
  5. Click Save.

Paying a working holiday maker and recording the earnings

After setting up your working holiday makers, you can do your normal payruns. Your working holiday makers will have 15% of their earnings withheld.

Important: Until MYOB Essentials' tax tables are updated, you should manually record your working holiday makers' gross earnings to see when they cross the $37,000 threshold. After crossing $37,000, foreign resident tax rates apply.

  FAQs


What happens if I don't register for the working holiday maker tax?

If you don't register for the working holiday maker tax, you must withhold the foreign resident tax rate of 32.5% for working holiday makers. This rate is currently available in MYOB Essentials. 

If you withhold 15% for working holiday makers without registering, you may be penalised by the ATO.

How do I handle payment summaries if I already employ working holiday makers in 2016?

If you already employ working holiday makers in 2016 who will be paid with the new tax rate in 2017, you need to issue two payment summaries with different rates:

  • July 1 - December 31 2016
  • January 1 - June 30 2017 
What if a working holiday maker hasn't provided their tax file number (TFN)?

You must withhold 47% from payments to working holiday makers if:

  • They have not provided you with their tax file number (TFN),
  • have not claimed an exemption from quoting their TFN, or
  • have not advised that they have applied for a TFN.
 
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