Backpacker Tax in Saasu
January 31st, 2017 by Oliver Sirisonthi
The new ATO tax for backpackers is effective from 1st January 2017. We have implemented an update to our payroll tax scales for Australian payroll.
The ATO has published their guide to the new tax rates for backpackers (working holiday makers) here.
These tax rates apply to overseas workers on Australian visa subclass 417, subclass 462, and bridging visa. For details, please refer to the ATO site here. These employees were previously treated as foreign residents for tax purposes.
Employers are required to be registered with the ATO by the now-extended deadline of January 31 to be able to withhold at the working holiday maker rate. However, those employers who won’t have working holiday workers until later in the year can register their business then.
To register your business with the ATO, please go to the ATO site here.
Employers who employ employees that are affected by this change prior to the update need to “terminate” their backpacker employees on their payroll and reinstate them under the new tax scale.
What does this mean for you in Saasu? As mentioned above, you must terminate your employee and create a new employee in the system. You can follow these steps to do so:
- Click on View > Employees > Open the appropriate employees card
- Deselect any Pay Run that the employee is on, enter a termination date of 31st December and Save
- Click on Duplicate to create a new employee card, remove the termination date and add the new card back to the Pay Run if needed
- Please select the appropriate backpacker tax rate by clicking on the Auto-Calc Tax tick box and selecting the relevant tax scale (with or without TFN provided) and Save
- Enter the opening balances for the employees Entitlements by following our guide here.
The employee will have two (2) PAYG Payment Summaries at the end of the financial year 2017. One is the payment summary before the new tax rate applied and the other is after the new tax rate is applied. According to the ATO only income earned from 1 January 2017 is eligible for the working holiday maker tax rates.