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backpacker tax

How to report ‘backpacker’s tax’ in Wages Manager payroll software

On 1 January 2017, tax rates changed for working holidaymakers  who are in Australia on a 417 or 462 visa. This is otherwise known as the ‘backpacker tax’.

What does the ‘Backpacker Tax’ mean for you as an Employer?

If you employ a working holidaymaker in Australia who holds a 417 or 462 Visa:
. You must withhold 15% from every dollar earned up to $37,000 with foreign resident tax rates applying from $37,001
. You must register with the ATO to withhold at the working holidaymaker tax rate
.  You will need to issue two payment summaries (with different rates) this year – one for the period to 31 December 2016 and a second for any period from 1 January 2017
. If you don’t register you will need to withhold at the foreign resident tax rate of 32.5%
. Penalties may apply if you don’t register

An interim update that enables our premier small business accounting and payroll software clients on Cashflow Manager GOLD and Wages Manager to manage the Backpacker Tax reporting requirements is now available for download as version from our website.

Even though the backpackers tax became effective as from January 1, 2017, the ATO has still not provided Cashflow Manager with formal specifications regarding the implementation and reporting of the Backpackers Tax.

The new update, now includes an option to “Register for New 2017 Holiday Makers Rates”. This will allow you to process 2 PAYG Payment Summaries, for different dates.

Please see attached support note for detailed instructions – Wages Manager – Backpacker Tax

When the ATO advises Cashflow Manager of the correct specifications for the handling of the Backpackers Tax, a further update to Cashflow Manager Gold and Wages Manager will be released.

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Comments (3)

  • Factoring Finance Reply

    I will make a report ‘backpacker’s tax’ in Wages Manager payroll software. This article is very helpful for me. Thanks for sharing this. I will follow what you said here. This is very helpful and informative.

    23/01/2020 at 12:28PM
  • sasha lette Reply

    I have just processed my first backpackers and i had to manually change the tax rate to the 15%.
    I this how it should be?? Or should it be working that out for me or is this still to come??
    Yes I am registered.

    16/04/2017 at 2:26PM
    • Rebecca Bendikov Reply

      Hi Sasha, thanks for your comment. Yes, the process is currently a manual process until we hear further from the ATO. The new backpacker’s tax update will allow you to process 2 PAYG Payment Summaries for different dates in the mean time. Hope this helps! Kind Regards, Rebecca

      21/04/2017 at 9:02AM

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