People who come to Australia on a “working holiday” are taxed at higher rates than Australian residents, meaning they do not get the same benefit of the tax-free threshold.

However, from 1 January 2017, working holiday makers will pay tax at 15% for taxable income up to $37,000, instead of the higher non-resident tax rates.

Am I a Working Holiday Maker?

You will pay tax at the working holiday maker rates if you hold either a:
1. Subclass 417 Working Holiday Visa
2. Subclass 462 Work and Holiday Visa
3. Certain bridging visas.

Which bridging visa’s allow me to pay tax at working holiday maker rates?

A bridging visa that permits you to work in Australia will allow you to access the lower rates if:

  • The bridging visa was granted in relation to a subclass 417 or 462 visa, and
  • you are still waiting for a decision to be made on your application, and
  • your most recent visa (other than your bridging visa) was a subclass 417 or 462 visa.

What is my “working holiday taxable income”?
Your working holiday taxable income is derived from all assessable income from sources in Australia while qualifying as a working holiday maker, less deductions relating to working holiday income.

As the working holiday maker tax rules only apply from 1 January 2017, the rates of tax payable will differ for working holiday makers, depending on whether or not Australian sourced income was derived before or after 1 January 2017. If a working holiday maker worked for the same employer before and after 1 January 2017, the employer will need to issue two separate PAYG summaries for the employee for the 2017 financial year to distinguish the income earned in each period.

Author: Jake Solomon