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This information applies to MYOB AccountRight version 19. For later versions, see our help centre.
https://help.myob.com/wiki/x/qJoHAQ
AccountRight Plus, Premier and Enterprise, Australia only
From 1 January 2017, a new tax was introduced for working holiday makers who are in Australia on a 417 or 462 visa (the 'backpacker tax').
Under this new tax scale, 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.
You should start withholding at these rates from the first pay run after 1 January 2017.
Registering with the ATO
If you currently employ, or are likely to employ working holiday makers, you must register with the ATO to avoid penalties.
How to withhold the working holiday maker tax
The 2017 compliance update (due late June 2017) will contain updated tax tables to cater for working holiday makers. Until this update is available, you can use the Withholding Variation tax table set to 15% for working holiday makers earning $0-37,000. After the worker earns above $37,000 you can assign them the applicable Foreign Resident tax table.
- Go to the Card File command centre and click Cards List.
- Click the Employee tab.
- Click the zoom arrow to open the employee's card. If you've created a new employee card (as described above) open this card.
- Click the Payroll Details tab then click Taxes.
- In the Tax Table field, select Withholding Variation.
- In the Withholding Variation Rate field, enter 15%.
- Click OK.
Repeat these steps for each working holiday maker you employ.
Important: You'll need to manually track your working holiday makers' gross earnings for the payroll year by running the Payroll Activity Summary report (Reports menu > Index to Reports > Payroll tab). Once a worker exceeds $37,000, repeat the above steps to assign the worker the applicable Foreign Resident tax table. Check with the ATO if you're unsure which tax table to assign.
FAQs
If you employed a working holiday maker before and after 1 January 2017, the ATO requires you to issue them two payment summaries for this financial year.
- One payment summary will cover the period 1/07/2016-31/12/2016, and the Gross Wages field will show the S income code beside it.
- The other payment summary will cover the period 1/01/2017-30/06/2017, and the Gross Wages field will show the H income code.
For AccountRight to issue two payment summaries for an employee with the applicable income code for gross wages, you would have set up a second employee card in January 2017 before the first pay run of the year.
- One employee card will be for the period 1/07/2016-31/12/2016. This card requires the applicable tax table assigned to their card, based on the employee’s Tax File Number declaration.
- The other employee card will be for 1 January 2017 onwards. This card requires the applicable Working Holiday Maker tax table assigned (available once you've installed the 2017 compliance update, due late June 2017).
With the two cards set up, and with the 2017 compliance update installed, you'll be able to prepare your payment summaries in AccountRight.
You might need expert help
If you've paid working holiday makers from 1 January 2017 and any of the following apply to you, you'll need to speak to your accounting or tax advisor about the implications for your business:
- You weren't aware of the new working holiday maker tax.
- You paid a working holiday maker between July - December 2016 and you haven't set up a second employee card for them.
- You're not sure if you've withheld the right amount of tax from working holiday makers.
If you don't register for the working holiday maker tax, you'll need to use the applicable Foreign Resident tax table for working holiday makers. If you're not sure which tax table to use, check with the ATO.
If you withhold 15% for working holiday makers without registering, you may be penalised by the ATO.
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.
If you've paid working holiday makers from 1 January 2017 and any of the following apply to you, you'll need to speak to your accounting or tax advisor about the implications for your business:
- You weren't aware of the new working holiday maker tax.
- You paid a working holiday maker between July - December 2016 and you haven't set up a second employee card for them.
- You're not sure if you've withheld the right amount of tax from working holiday makers.
Working holiday makers who earned income between 1 July and 31 December 2016 and continued earning income up to 30 June 2017 will require two payment summaries. This is an ATO requirement because the tax change introduces two separate rates of taxation within the same financial year.
You can set up a new employee card as described above to allow AccountRight to generate two payment summaries for working holiday makers. One payment summary will be for the period 1 July - 31 December 2016, and the second payment summary will be for 1 January - 30 June 2017.
Before preparing the payment summaries, you'll need to install the 2017 compliance update (available late June).