Lower taxes for working holiday makers
From 1 January 2017, lower the income tax rate for all working holiday makers to 19 per cent from the first dollar earned up to $37,000, with ordinary marginal tax rates to be applied from $37,001 onwards.
New tax rates for WHMs Taxable income
$37,001 – $80,000 ($87,000) $180,001 and over
Tax on this income
$7,030 plus 32.5c for each $1 over $37,000 $58,005 plus 45c for each $1 over $180,000
|0 – $37,000||19c for each dollar over $0|
|$80,001 ($87,001) – $180,000||$21,005 plus 37c for each $1 over $80,000 ($87,000)|
Foreign residents are not required to pay the Medicare levy.
The above rates do not include the Temporary Budget Repair Levy; this levy is payable at a rate of 2% for taxable incomes over $180,000.
The $80,000 threshold is increasing to $87,000 for the 2016-17 financial year; tax paid calculation is based on the $80,000 threshold.
Tourism and flexibility initiatives
- From 1 July 2017, reduce working holiday maker visa (subclass 417 and 462) application charges by $50 to $390.
- Provide $10 million to Tourism Australia to support a global youth-targeted advertising campaign.
- The Government is also allowing working holiday makers to stay with one employer for up to12 months, as long as the second six months is worked in a different location.Compliance and integrity initiatives
- Require employers of working holiday makers to register with the Australian Taxation Office (ATO) in order to withhold at the 19 per cent tax rate.
- – Employers of working holiday makers who do not register with the ATO will be required to withhold at the 32.5 per cent rate and may be subject to ATO penalties.
- – If an employer withholds at the 32.5 per cent rate, working holiday makers will have access to the 19 per cent rate on lodgement of their tax return.
- Provide an additional $10 million funding to the ATO and the Fair Work Ombudsman (FWO) to establish the employer register and assist with ongoing compliance initiatives and to address workplace exploitation of working holiday makers.
– The register will be made public, so that working holiday makers and other employers can identify if an employer is registered.
Measures to offset the Budget impact of the proposals
- Increase, from 1 July 2017, the Passenger Movement Charge (PMC) by a one-off amount of $5.00 (from $55.00).
- Increase the rate of tax on the Departing Australia Superannuation Payment (DASP) for working holiday makers to 95 per cent, also effective 1 July 2017.