Do you need to lodge a tax return on a working holiday visa?

We often get enquiries from clients as to whether or not they need to lodge a tax return. While most people do need to lodge a tax return each year, there are ways for you to check if you are unsure.

If you are unsure in regards to whether or not you will require to lodge a return, the below guide may be able to help you determine whether or not it is necessary.

As a general rule of thumb, if you are a resident or citizen and have received income within the past financial year, you will generally always be required to lodge a return.

If you are on a working holiday visa in Australia, tax will be withheld from you and there is a possibility that you may need to lodge a tax return each year. The determining factor for working holiday visa individuals as to whether or not they require to lodge a return will depend on how much income you are earning during each financial year.

In Australia, the financial year starts on 1st July and ends on 30th June of the following year.

If you are on a working holiday visa, the first $37,000 of your income is taxed at 15% and the remaining sum is taxed based on ordinary rates. You are considered a working holiday maker if you hold either a 417 (Working Holiday) or 462(Work and Holiday) visa status.

Your employer will also pay you superannuation if you are eligible as a working holiday maker. If you are eligible to have superannuation, when you leave Australia, you can apply to have your superannuation paid out to you as “Departing Australia Superannuation Payment”. There will be, however, a tax on this payment. The tax on any Departing Australia Superannuation Payment made on or after 1st July, 2017 will be 65%.

What would I require to start work and lodge my tax return?

In Australia, you will be required to give your employer a Tax File Number declaration form, which will help your employer determine how much tax they will need to withhold from your salary or wages.

You should always ensure to notify your employer whether you have a 417 (working holiday) or 462 (work and holiday) even if they will check on their own. This is to make sure the information will be correct.

If your employer is registered as an employer for working holiday makers, then your first $37,000 will be taxed at 15%. If under the situation where your employer is not registered as an employer for working holiday makers, they must withhold tax from your pay using foreign resident tax rates. Foreign resident tax rates will vary and starts from 32.5%.

At the end of the financial year, or when you have finished working, your employer will issue you a payment summary which will then determine as to whether or not you will be required to pay tax on a working holiday visa.

If all of your income was earned while you were registered as a working holiday maker and the total of your taxable income for that financial year is less than $37,001, then you do not need to lodge a tax return.

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