‘Backpacker Tax’: work and holiday visa (417 and 462) from 1 January 2017

462 work and holiday visa tax changes 2016

¿Changes in the Work and Holiday Visa?

The Australian government has finally made official the new backpacker tax rate which will affect all working holiday visa holders (417 and 462) starting from January 1, 2017.

Here are the important changes that you need to be aware of:

  • From January 1, the tax rate for working holidays visa holders will be 15% on earnings up to A$37,000. This is much less than the proposed 32.5%.
  • Above A$37,000 ordinary marginal rates will apply, which means all earnings from A$37,001-$80,000 will be taxed at the standard 32.5% rate.
  • Backpackers will no longer be eligible to be classed as residents for tax purposes, no matter how long you stay in any one location. The tax on working holiday makers’ superannuation when they leave Australia will be 65%.

Overall the changes are quite positive as the government has also introduced several other changes to the working holiday visas to make a working holiday more available and more affordable, including:

  • eligible age limit has been increased from 30 to 35 (effective as of 19/11/2016)
  • the visa application fee will be reduced AUD$50
  • an employer with premises in different regions may retain a backpacker for a full year, so long as the second six months is worked in a different location (remember that currently, a backpacker can only stay six months with the same employer).
  • Introduction of a 2nd Year Visa option for 462 visa holders.

Even with these changes to how backpackers are taxed, Australia still has the highest minimum wage in the world, even when adjusted for the new tax.    See for yourself (converted to Australian dollars for comparison):

  • Australia (casual jobs) = A$22.13 per hour ($18.81 after 15% backpacker tax)
  • Australia (full-time jobs) = A$17.70 per hour ($15.05 after 15% tax)
  • New Zealand = A$14.01 per hour
  • Canada = A$10.45 per hour
  • USA = A$9.43 per hour

Thanks to an employment law called Casual Loading, almost all of the jobs  have a minimum pay rate of $22.13 per hour or more (that’s $18.81 after backpacker tax!!), which equates to the highest backpacker earning potential of any working holiday country in the world! And don’t forget, Australia has 3 of the top 10 most liveable cities in the world too.

So the final government legislation has decreased the backpacker tax rate even further to 15%, and the superannuation tax rate from 95% to 65%! We think this is great news – and an Australian working holiday is still the most profitable in the world!

Just see here for the facts.

Source: Work and Travel Company

Photo: Fruit Picking Jobs Australia