With the re-opening of Australia’s international borders, the trickle of working holiday makers will become a stream.
Many will be on the Subclass 417 visa program which is a cultural exchange program for young adults (aged 18 to 30/35) from 19 eligible partner countries. The program allows them to work in Australia while having an extended holiday. It is a requirement that they work 3 months in the agriculture, construction or healthcare sectors.
Most will also work in the hospitality sector in bars, restaurants and hotels during their 12 month visa stays. Some will extend their visa for another 12 months.
The Australian Taxation Office issued a practice note to employers: Do you employ working holiday makers? on 21 December 2021 which sets out its current guidance:
If you employ working holiday makers, regardless of the country they are from, you must continue to withhold 15% tax from their pay – unless you receive a pay as you go variation notice from the ATO.
This follows the recent decision by the High Court in the matter of Addy v Commissioner of Taxation. The decision means an eligible working holiday maker may be tax assessed the same as an Australian resident, if they are both:
If your employee is a working holiday maker from one of the above countries and an Australian resident for tax purposes, they can lodge a tax return at the end of the income year to receive a tax refund (where eligible).
Note the reference to Addy v Commissioner of Taxation and the comments that follow.
This is the background:
If not, the tax treaties provide no special protection and these nationals will be taxed on income at the same rate as working holiday nationals of other countries: i.e. a flat 15₵ in the dollar.
Anthony Cordato has practised as a lawyer in the central business district of Sydney for many years. Anthony practises in his own firm, the boutique legal firm of Cordato Partners, which he founded in 1996. Anthony specialises in the fields of law he loves: business law, property (real estate) law and tourism (travel) law. With his experienced team, Anthony looks after transactions and litigation. Anthony is proud to have acted on more than 10,000 real estate transactions. His firm is cited as a party’s solicitor in more than 65 reported decisions in the courts and tribunals of New South Wales and in the Federal Courts. Contact Anthony through his website or LinkedIn.