Tax Guide for Working Holiday Makers in Australia
Embarking on a Working Holiday in Australia is an incredible adventure. Understanding the tax system is crucial to ensure you comply with the law and get the maximum refund you're entitled to when you leave. This guide explains everything you need to know, from your tax rate to how to claim your refund.
Who is a Working Holiday Maker?
A Working Holiday Maker (WHM) is anyone who holds a:
- Subclass 417 (Working Holiday) visa, or
- Subclass 462 (Work and Holiday) visa.
The Australian tax system treats WHMs differently from other foreign residents and Australian residents. Special tax rates apply from the very first dollar you earn.
The Working Holiday Maker Tax Rate
As of the 2024-25 income year, a specific tax rate applies to your employment income. This rate applies from your first dollar earned.
WHM Tax Rates for 2024-25:
- 15% on every dollar you earn up to $45,000
- 30% on every dollar you earn from $45,001 to $120,000
- 37% on every dollar you earn from $120,001 to $180,000
- 45% on every dollar you earn over $180,000
Important: This special rate only applies to income from employment (e.g., wages from working in a bar, farm, cafe, etc.). It does not apply to other types of income like bank interest or capital gains, which are taxed at foreign resident rates.
Your Tax-Free Threshold & Tax File Number (TFN)
No Tax-Free Threshold
Unlike Australian residents, Working Holiday Makers are not entitled to the tax-free threshold (the first $18,200 of income is tax-free for residents). This is why tax is deducted from your first dollar of earnings.
You Must Have a TFN
It is a legal requirement to provide your Tax File Number (TFN) to your employer. If you don't, your employer is required to withhold tax at the highest rate (47%) from your pay, which is much higher than the WHM rate. You can apply for a TFN online for free on the ATO website.
Superannuation for Working Holiday Makers
You Get Super
If you earn more than $450 (before tax) in a month, your employer must pay superannuation (super) into a fund for you. This is on top of your wage.
Departing Australia Superannuation Payment (DASP)
When your visa expires and you leave Australia permanently, you can claim your super back. This is called a DASP.
Important: DASP payments are taxed at a separate rate by the ATO (currently 65% for WHMs). It is a separate process from your income tax return.
How to Lodge Your Tax Return
You must lodge an Australian tax return if you earned any income during the financial year (1 July to 30 June).
What you'll need:
- Your Tax File Number (TFN)
- Your passport
- Payment Summaries (now called Single Touch Payroll (STP) finalisations) from your employers. You can access this information through your ATO online account via myGov.
- Receipts for any work-related expenses you want to claim.
- Details of any other income (e.g., bank interest).
The Process:
- Set up a myGov account and link it to the ATO.
- Check that all your income from your employers is listed correctly in your pre-filled information.
- Claim any eligible deductions.
- Lodge your return online. The ATO will calculate your refund or any tax debt.
What Can You Claim? (Common Deductions)
You can claim a tax deduction for expenses you paid that are directly related to earning your income. Keep your receipts!
Work-related travel
Costs of driving between different jobs (but not from home to your first job).
Uniforms & protective clothing
Specific, compulsory uniforms or items like steel-capped boots, sun protection gear (hats, long-sleeve shirts), and safety glasses.
Tools & equipment
Items you bought for work that weren't supplied by your employer.
Self-education
Course fees or books for a course that directly relates to your current job (e.g., a barista course if you are working as a barista).
Phone & internet expenses
The work-related percentage of your bills if you use your phone for work calls, checking rosters, or emails.
You cannot claim personal expenses like everyday clothing, travel to and from your normal workplace, or most meals.
Getting Your Tax Refund
If too much tax was withheld from your pay during the year (which is very common), you will receive a refund after you lodge your tax return.
When to lodge
You can lodge your return after 1 July for the previous financial year.
How long it takes
If you lodge online, most refunds are issued within 2 weeks.
Beware of "Refund" Scams
Be very careful of companies that offer to get you an "early refund" or charge a huge percentage of your refund as a fee. The safest and cheapest way is to lodge yourself online via myGov or use a registered tax agent.
FAQs for Working Holiday Makers
Q: Do I have to do a tax return if I only worked for a few months?
A: Yes, if you earned any income in Australia, you are required to lodge a tax return for that financial year.
Q: I'm from a country with a Double Tax Agreement (DTA) with Australia. Do I pay tax?
A: Yes. While a DTA can determine which country has the right to tax certain types of income, if you are a working holiday maker in Australia, your employment income is almost always taxable in Australia.
Q: Can I claim the tax back on my super (DASP) in my tax return?
A: No. Superannuation and the DASP refund are completely separate from your income tax return. You must apply for your DASP refund separately through the ATO after you have left Australia.
Q: What if I can't get a payment summary from my old employer?
A: Your income information should be pre-filled through Single Touch Payroll (STP) in your myGov account. If it's missing, try to contact the employer. If you can't, you can still declare the income yourself using your final payslip or bank statements as a record.
Q: Is it better to use a tax agent?
A: For simple affairs, doing it yourself via myGov is free and straightforward. If your situation is complex (e.g., you had multiple employers, ran a business, or have deductions you're unsure about), a registered tax agent can be helpful. Never use an unregistered preparer.
Need Help with Your Working Holiday Tax Return?
Our tax experts can help you navigate the Australian tax system and ensure you get the maximum refund you're entitled to.
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