Working holiday makers (backpackers)

Commissioner clarifies current practices whilst awaiting new laws: generally non-resident as they move around and 32.5% tax applies from $1

13 Dec 2016 Written by John Morgan
With a number of media reports circulating in relation to the tax treatment for working holiday makers and the tax that they pay, the ATO has sought to make clear the tax arrangements in place.
Tax Commissioner Chris Jordan said the amount of tax that a working holiday maker may pay will depend on their residency status for tax purposes, and in this regard, the ATO considers the individual circumstances that apply to each working holiday maker.
Mr Jordan said the reality is that the ATO sees that most working holiday makers are transient – they move around and do not establish residency in Australia during their stay. The ATO considers that most working holiday makers are non-residents due to their pattern of working and holidaying while in Australia. Therefore, as a non-resident for tax purposes, they will be taxed only on their Australian-sourced income, such as money they earn working in Australia, and they will commence paying tax on the first dollar of income they earn – at 32.5c in the dollar.
If the Bills currently before Parliament are not passed, the Commissioner said the ATO will continue to apply the current law.
[Those Bills are: Treasury Laws Amendment (Working Holiday Maker Reform) Bill 2016; Income Tax Rates Amendment (Working Holiday Maker Reform) Bill 2016; Passenger Movement Charge Amendment Bill 2016; and Superannuation (Departing Australia Superannuation Payments Tax) Amendment Bill 2016.]

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