The ATO is urging all businesses that employ workers on 417 and 462 visas to register ahead of the deadline to minimise hassles in tax withholding calculations.
From 1 January 2017, the working holiday-maker tax rate – also known as the backpacker tax – of 15 per cent has applied from the first dollar earned by workers on either of those two working holiday visas.
According to assistant tax commissioner Michael Gleeson, employers of working holiday-makers must register with the ATO and check their workers have the right visa before withholding at the new rate.
“Anyone currently employing someone on a 417 or 462 visa needs to register with the ATO by 31 January 2017 to use the new rate,” Mr Gleeson explains.
“If you aren’t currently employing backpackers but will later in the year, you do not need to register by the deadline. You just need to register when you employ them.
“A registered employer should withhold at a rate of 15 per cent for the first $37,000 paid to a working holiday-maker. An unregistered employer still has a withholding obligation, but at standard foreign resident rates.”
Mr Gleeson says that by registering, business owners can allow the ATO to identify employers who can withhold tax at the concessional rate for backpackers.
“Knowing which employers have registered and are doing the right thing ensures we can focus our activities on working with employers of backpackers who are not withholding at the correct rate,” he says.
“It’s quick and straightforward to register – it’s a simple online process and it will take about five minutes.”
Mr Gleeson says the change is also an opportune time for employers to check their workers have the right visas.
A worker’s visa status can be checked using the Visa Entitlement Verification Online (VEVO) service on the Department of Immigration and Border Protection website. Backpackers can also easily access this information and make it available to their employers.