Employers of non-resident working holiday makers: ATO registration
There are a number of industries in our local area that rely heavily on the labour of non-resident employees who are on a working holiday in Australia: Agriculture, hospitality, construction and domestic services are just the start.
To be legally able to work in Australia, a person must hold one of two types of visa subclass: 417 or 462. The difference between these two visas is simply their country of residence. You can verify that they have the correct visa by using the online verification system provided by the ATO – you will need their visa number to do this.
What has changed?
From 1 January, 2017** there will be a requirement to register with the ATO before you make your first payment to a working holiday maker holding a visa subclass 417 or 462. This will allow you to withhold tax at the working holiday maker tax rate of 15% from the first dollar earned. This rate will apply to wages paid from 1 January 2017.
They cannot claim the tax-free-threshold regardless of their residency status and must provide a tax file number (TFN), otherwise you need to withhold at the top rate of tax.
What happens if I don’t register?
If you don’t register, you are required to use the foreign resident withholding rates which start at 32.5% for the first $37,000. Penalties will also apply to you as the employer if you fail to register.
How do I register?
There is an easy registration tool on the ATO website which allows you to do this quickly and easily. You can find this tool, as well as more information about this new employment obligation by going to the ATO website here: https://www.ato.gov.au/Business/Your-workers/Employers-of-working-holiday-makers/
More information about the visa subclasses can be found on the official Australian tourism website here: http://www.australia.com/en/planning/working-holiday-visa.html
Due to ongoing ATO system issues, registration has been extended to 31 January. If you can’t register because of these issues, and you are employing working holiday makers, you will not be penalised as long as you register by 31 January 2017. You can still use the new withholding tax rate of 15% from 1 January 2017.
Lauren Bird | Bookkeeper | The Money Edge| Bundaberg