Backpacker Tax Information
Backpackers are young people visiting Australia usually for a combination of tourism and work. They must be under 30 years of age. Usually backpackers need to work to help fund their time Down Under. The Federal Government allows them to work and to do so issue two types of backpacker visa.
- Class 462 Visa
- Class 417 Visa
Both visas allow the holder to stay in Australia for up to 12 months and work. The 417 visa allows for an extension once the 12 months expires. You can’t extend a 462 visa. The other main difference concerns the countries attached to each class of visa. The Australian government has reciprocal rights with different countries for different classes of visa.
- Class 417 - UK, Ireland, Canada and others
- Class 462 - Indonesia, Thailand, USA and others
Backpackers Tax Rate
The key is to obtain a Tax File Number [TFN] before you start work. If you start a job and don’t have a TFN, your pay will be docked, at the source, at a rate of 46.5%. In other words you’ll lose about half your wages in tax. So it makes sense to have that TFN.
You can obtain a TFN from the tax Office or better still, you can obtain one online. The Tax Office website offers detailed information here.
If you go in person to the Tax Office, you will need ID such as your passport.
If you wish to work for yourself with a backpacker visa, that too is allowed provided you obtain an Australian Business Number [ABN]. An ABN, like a TFN, can also be obtained from the Australian Tax Office. If you work for yourself without an ABN, you are liable to pay 46.5% tax.
Backpackers with an appropriate visa and TFN are entitled to claim a refund for the tax they have paid. Just by making a claim does not guarantee your claim will be met. The financial year in Australia runs from July 1 to June 30 and a backpacker can complete and forward the appropriate tax form once the financial year ends. If they leave Australia before the end of the financial year, they can file their return as soon as they stop working.
Backpackers should be aware that there are many expenses which workers are entitled to claim to reduce the amount of tax they owe and thus the amount of refund they can receive. For example the sorts of things the Australian Tax Office allows are membership of trade unions, clothing, footwear and travel costs required for your work, tools of trade, accountancy fees in preparing your tax return, travel costs, etc.
A backpacker can file their tax return themselves either online or by post to the Tax Office. They can hire a Tax Agent to handle their return and any refund will usually be forwarded to the Tax Agent. Doing your own return may save you on the agent’s fee but the agent may know much more than the backpacker as far as a legitimate deduction is concerned.