New legislation came into effect on 1st January 2017. Any employer is able to hire a working holiday maker, especially where there is a need to labour hire for a short period. A working holiday maker will hold a Working Holiday Visa (subclass 417) or Work and Holiday Visa (subclass 462).
Working holiday makers will be taxed at 15% from the first dollar earned, regardless of their residency status. Working holiday makers cannot claim the tax-free threshold and must provide the employer a Tax File Number (TFN). Where the holiday maker does not provide an employer with a TFN, tax will be withheld at the top rate.
This legislative change applies to all industries and geographical locations within Australia
NOTE: Please refer to the ATO website for further details: https://www.ato.gov.au/Individuals/International-tax-for-individuals/Coming-to-Australia/Working-holiday-makers/
Registration
Employers of working holiday makers must first register for Pay As You Go (PAYG) withholding or a withholding payer number, with the ATO.
Employers should ensure they register prior to making the first payment to a working holiday maker.
Once the employer is registered, a withholding rate of 15% applies to the first $45,000 of a working holiday makers income. Foreign resident withholding rates apply to income over $45,000.
If employers do not register with the ATO to withhold at working holiday maker rates, then the withholding rate will be as per foreign resident rates.
NOTE: The ATO advises Penalties may apply for failing to register
Configuration and Set Up
Look up Codes
Lookup codes are specific values used in COINS payroll. They can be user defined or specific for legislation requirements. The following lookup codes are specific values set by the ATO.
Adding a New Lookup Code
The ATO has modified the payment summary for working holiday makers. For this to be populated a new Lookup table will need to be added to your database.
Payroll > Global Setup > Lookup codes
In the ‘Lookup Type’ box at the bottom select ‘Lookup Types’
3. Click Filter button
4. Select Add button.
5. Type in Code ‘INCTYPE’.
6. Type in Description ‘Income Type’.
7. Select Save.
Lookup Type - Income Type
‘INCTYPE’ is the Lookup Code that is required to be printed on the income statement for working holiday makers.
Where an employee is a working holiday maker, The lookup code ‘WHM’ should be allocated against the employee field ‘Income Type’.
Where no Lookup Code is allocated against the field the file will default to ‘SAW’ for salary employee.
To Add the require codes to the new table:
Payroll > Global Setup > Lookup codes
In the ‘Lookup Type’ box at the bottom select ‘Income Type’
3. Click Filter button
4. Select Add button
5. Type in Codes i.e. WHM (refer to ATO for valid income types)
6. Type in Description i.e. ‘Working Holiday Maker’
7. Select Save.
Lookup Type - Tax Tables
A new tax table code for working holiday makers should be added to the Lookup table ‘TAXTYPE’.
To Add the require codes to the new table:
Payroll > Global Setup > Lookup codes
In the Lookup Type box at the bottom select ‘Income Type’
2. Click Filter button
3. Select Add button
4. Type in Codes i.e. WHM
5. Type in Description i.e. ‘Working Holiday Maker’
6. Select Save.
Parameter Settings
Once the employer has registered for WHM with the ATO, a parameter setting must be applied.
Payroll > Global Setup > Parameters
PR-WHM-REGISTERED
Set to ‘Y’ (yes) or ‘N’ (no)
‘Y’ indicates the employer has registered with the ATO.