The treasurer has announced that the new tax rate for backpackers will be reduced from 19 per cent to 15 per cent on earnings up to $37,000 on 28 November 2016. The new tax rules will be effective from 1 January 2017. Foreign resident tax rates will apply after that (refer to the tax table below).
Employers who hire working holiday makers will need to take a once-off registration with the Australian Taxation Office to be able to withhold tax at this new rate. Employers who do not register will be required to withhold tax at 32.5 per cent rate and might be subjected to penalty.
In addition, from 1 July 2017 the rate of tax on the Departing Australia Superannuation Payment (DASP) for working holiday makers will be increased to 65 per cent.
|Taxable income||Tax on this income|
|0 – $37,000||15c for each $1|
|$37,001 – $87,000||$5,550 plus 32.5c for each $1 over $37,000|
|$87,001– $180,000||$21,800 plus 37c for each $1 over $87,000|
|$180,001 and over||$56,210 plus 45c for each $1 over $180,000|