Backpacker tax information
Backpackers are young people between the ages of 18 and 30, visiting Australia for a combination of tourism and work.
There are two main subclasses of working holiday visas, that The Federal Government issues for backpackers:
- WHV 417 (Belgium, Canada, Cyprus, Denmark, Estonia, Finland, France, Germany, Hong Kong, Ireland, Italy, Japan, Korea, Malta, Netherlands, Norway, Sweden, Taiwan, UK).
- Subclass 462 (Argentina, Bangladesh, Chile, Indonesia, Malaysia, Thailand, Turkey, USA, Uruguay).
Both these visas entitle you to:
- Stay in Australia up to 12 months
- Work in Oz for up to 6 months with each employer
- Study for up to 4 months
- Leave and re-enter Australia while your visa is valid
If you’re granted a 417 or 462 visa and you do three months specified work during your first year, you can apply for a 2nd year working holiday visa. Furthermore, complete 6 months of specified work during your second year and be eligible for a third year extension.
Are backpackers "residents for tax purposes"?
Regardless of your visa type, you are generally deemed a resident for tax purposes in Australia if you show you've been living and working in the same location for a period of more than 6 months (183 days to be exact). Residential ties may also influence this – things like living arrangements, reason for being in Australia, where most of your belonging are located (ie. in Australia or in your home country), have you joined any clubs, gyms etc. and whether you intend to stay long-term.
Most backpackers are non-residents, but you can complete a short residency questionnaire with our tax agent to figure out your status correctly.
Backpacker tax returns
You’re legally obliged to file an Australian tax return if you’ve paid tax of any kind during your stay, even on a working holiday visa or as a foreign resident.
The Australian financial year runs from the 1st July to the 30th June, and because you have to submit a tax return every year, you may have to submit more than one if you’re present for longer than one tax year.
If you’re a foreign resident, you are no longer an Australian resident for tax purposes or no longer receive Australian-sourced income (i.e., you’ve left your job and aren’t due to receive any outstanding salary), you may able to send in a tax return early if you’re leaving Australia permanently.
As a backpacker, you need a TFN (Tax File Number) - an unique number issued by the Australian Taxation Office. TFN enables you to pay the correct amount of taxes, to start and change jobs easily, claim a refund, and avail of many other benefits. You will also need to obtain a TFN in order to get an ABN (Australian Business Number) if you are self-employed.
Backpacker Tax rates and refunds
From January 1, 2017, the tax rate for working holidaymakers in Australia has been made 15% on earnings up to $37,000.
This has been reduced from the proposed 32.5% that was originally announced in the budget.
For anything above $37,000, ordinary marginal rates will apply, which means all earnings from $37,001- $80,000 will be taxed at the standard 32.5% rate.
The only way that a taxpayer can minimise tax liability or increase the value of his / her refund is to include work-related expenses. Work related expenses vary from person to person as they are specific to your core occupation – so it really depends on what your job was in Australia. There are some exceptions; however in most cases you should retain all your receipts for work expenses so you can have proof for the Australian Tax Office.
Even if you're not eligible for an income tax refund due to the length of your stay or nature of your visa, you should still be eligible to claim a superannuation refund. As a working holiday maker, any departing Australia super payment made on or after 1 July 2017 is taxed at 65%.
Superannuation is a percentage of your salary put aside for the purposes of a retirement fund, but if you’re not staying in Australia until retirement you’re entitled to a refund!
You can apply for your superannuation as soon as you depart Australia permanently and your visa has expired.
If you've just arrived in Australia, we can help you open a super account.
Filing your tax return
A backpacker can use an authorized tax agent like Taxback.com to file their Australian tax return. This way you don’t need to know complicated tax laws and it’s guaranteed that your return will be filed correctly.
To apply for your refund, register online and the team of tax experts will provide you with a completely free tax refund estimate. If you are happy with it, they will complete your application. You simply wait until you receive the maximum legal refund straight to your bank account.
Find out more information about Tax Back and their services.