Working holiday visa holders have been paying a special rate of tax in Australia for several years.
Here’s a quick summary of the tax rates for working holiday maker visa holders, including a commentary on what is taxable and what happens if a working holiday visa holder applies for another visa such as an employer sponsored visa or a partner visa.
Tax Rates and Who is Eligible
You are a working holiday maker if you are the holder of one of these two visa sub classes:
- 417 (Working Holiday)
- 462 (Work and Holiday)
If you are subject to tax in Australia – broadly, if you are earning income with an Australian source – and are the holder of one of these visas the first $37,000 of your income is taxed at 15%.
The balance is taxed at ordinary rates of income tax.
This means that the holder of a working holiday maker visa does not receive the $18,200 tax free threshold to which tax residents of Australia are entitled.
Note that there is an ongoing legal case which may impact working holiday makers who are residents of Australia for tax purposes, and who are from one of the following countries:
- United Kingdom
Temporary Tax Resident Exemptions, and Changing Visas
Readers of our blogs will be aware that working holiday maker visa holders can usually also access the temporary tax resident exemptions whereby foreign source income such as income from a rental property located outside Australia, or interest/dividends on investment monies held outside Australia is not taxable in Australia.
These tax exemptions cease to be available though where a temporary visa holder becomes the de facto spouse or partner of an Australian citizen or permanent resident, or a person who is an eligible New Zealand citizen.
In this situation it is possible for income with a source outside Australia to become taxable in Australia – at working holiday maker visa rates.
In addition, when a working holiday maker visa holder applies while in Australia for another visa – such as an employer sponsored visa or a partner visa – the working holiday maker tax rates apply until the working holiday maker visa period comes to an end, ie when the bridging visa resulting from the onshore visa application comes into effect, or the onshore visa is granted, whichever is the earlier.
Superannuation Contributions and Leaving Australia
An employer of a working holiday maker visa holder also has to pay superannuation if you are what is called an eligible employee.
Note that if you are a working holiday maker visa holder you can apply to have your super paid to you personally if and when you leave Australia permanently.
This is called a Departing Australia Superannuation Payment (DASP).
Tax is withheld on any DASP made to a working holiday maker on or after the 1st of July 2017 at the rate of 65%.
How bdh Tax Can Help
bdh Tax is experienced in the preparation of tax returns for those who have more complex visa arrangements.
Please complete the enquiry form on this web page if you have a working holiday maker visa, or if you have held such a visa and are the holder of a different type of visa that allows you to remain in Australia beyond the expiry of your working holiday maker visa.
We will be pleased to have a free initial chat about your situation and how we can help with your Australian tax returns.