From 1 January 2017 working holiday makers are subject to special tax rates.
By definition, working holiday makers are the holders visa subclasses 417 and 462 which are both temporary visas under the immigration rules.
Prior to 1 January 2017 WHMs were taxed according to the residency rules enabling them to be taxed as residents for tax purposes with full access to the tax free threshold.
Departing superannuation payments are also taxed, increased to 65% from 1 July 2017. See Departing Australia tax on superannuation payments
The Tax Office has detailed rules and tax obligations for working holiday makers here.
Legal Challenge to Backpacker Tax
[6 August 2020] Commissioner wins on appeal: The Full Federal Court has allowed an appeal by the Tax Office and reversed the October 2019 decision which found that the backpacker tax is in conflict with Australia’s treaty obligations.
As a result the tax position of backpackers remains as it was before the challenge.
The Court has upheld the special non-resident tax scale applying to backpackers and rejected arguments that it conflicts with Australia’s tax treaty obligations.
See the full judgement: Commissioner of Taxation v Addy  FCAFC 135
[30 October 2019] The Federal Court has found the backpacker tax is in conflict with Australia’s treaty obligations with the UK (and therefore potentially other countries), which could result in refunds of tax previously paid.
The Tax Office has appealed the decision, and has released a statement indicating that the 15% tax rate should continue to be applied until the appeals process has been exhausted.
According to the Tax Office statement, the court decision only affects working holiday makers from Chile, Finland, Germany, Japan, Norway, Turkey and the United Kingdom and who are considered resident for tax purposes.
[4 December 2018] An international tax return firm is challenging Australia’s backpacker tax in the Federal Court.
The reported basis of the challenge is that the taxes, which discriminate against backpackers, are a breach of Australia’s international agreements with countries such as Germany, US and the U.K.
Backpackers are taxed without the benefit of a tax-free threshold, at a flat rate of 15% up to (currently) $37,000.
If the challenge is successful, backpackers who have already paid tax at the working holiday maker higher rate could be entitled to a refund.
Working Holiday Makers’ Tax Rates
Tax rates for the years:
The tax rates published here are as currently legislated. However please keep in mind that rates in futures years can be changed at any time according to government policy.
Working holiday makers are taxed on a progressive tax scale without the benefit of a tax-free threshold.
Budget 2018 proposals set forth a number of adjustments to the tax scales over the tax years beginning 1 July 2018 through to 1 July 2024 and following.
The amended tax tables set out below reflect all of these changes. However please note that the rates shown for future years are the currently legislated rates, and are subject to change at any time according to changes in government policy.
This page was last modified 2020-08-06