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Tax rises for people with worki...

Tax rises for people with working holiday visa

Last September the Treasurer announced that those on working holiday visas would have to pay 19% tax on earnings up to $37,000. People on this type of visa will no longer be privy to the tax-free threshold. They will pay regular incremental tax on earnings over the $37,000. 

However, in a u-turn announced by the Treasurer, the amount of tax has now been set at 15% rather than the previously announced 19%. Employers who take on workers with a holiday visa will be required to make a one-off registration with the tax authorities so they can hold the 15% taxation. Employers which fail to do this will have to hold tax at a rate of 32.5%. 

In another move which is set to come into force this July, those departing the country under the Departing Australia Superannuation Payment scheme will now be charged 65% tax. These new changes are replacing the 2015-2016 Federal Budget incentive which was proposed to change the rules for taxing those on a working holiday. 

Australia is one of the most popular countries in the world for people to obtain a working holiday visa. Though it was announced recently that they have cut a number of 457 visas short. The policy is said to disproportionately affect Indian workers. 

Following the news, people will now only be able to stay in the country for 60 days after their contract ends, opposed to the 90 days before the change. 

Peter Dutton, the immigration minister, said: "The change is expected to assist in ensuring that the 457 programme met its intent of acting as a supplement to, rather than a substitute for, Australian workers apart from reducing the vulnerability of 457 visa holders, who were only permitted to work for an approved sponsor and were not eligible for unemployment benefits, from entering into informal employment arrangements."

All information provided is of a general nature only and does not take into account your personal financial circumstances or objectives. Before making a decision on the basis of this material, you need to consider, with or without the assistance of a financial adviser, whether the material is appropriate in light of your individual needs and circumstances. This information does not constitute a recommendation to invest in or take out any of the products or services provided by SMATS Services (Australia) Pty Ltd or Australasian Taxation Services Pty Ltd.

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