In September 2016, our treasurer Scott Morrison announced that from 1 January 2017 the tax rate for the first $37,000 for all working holiday makers in Australia will be reduced from 32.5% to 19%.

In November 2016, he made another announcement reducing the rate further from 19% to 15% and the law received Royal Assent on 2nd December 2016.
However, for any wages that were paid during 1st July 2016 to 31st December 2016, the employer still has the obligation to withhold 32.5%.

If you are one of the employers out there who currently employs working holiday makers, the ATO has come out and said you will have to undertake a “simple, once-off registration” with the ATO so that they can identify you and check whether you have done the right by them (withhold payments on the Wages paid to working holiday makers).

If you, as an employer do not register, then you will be required to withhold 32.5% instead!

You might say “this is just too complicated, and so what if I make a mistake and withhold less – it is the employee who needs to pay the shortfall in their tax return anyway”.

Well, according to the ATO you will be liable for a penalty if you fail to withhold or pay a PAYG Withholding when required. Guess what, the penalty is the shortfall that you should have withhold!

The ATO has urged all business owners who currently employ someone who is on a 417 or 462 Visa to register as soon as possible to enable them to apply the new tax rate.

Technically an unregistered employer still has a withholding obligation but at the standard foreign resident rates.


P.S. The visa status of workers can be checked via