As you might have heard already, working holiday makers need to pay higher tax rates, which means changes in withholding amounts for employers. The ATO has been checking files and data matching this information with the Payment Summaries.
When hiring a new worker from overseas, you need to make sure you know their visa status and number before you enter them into Payroll. Usually, they have either a confirmation email from Home Affairs or an app called myVEVO with this information. There you can check the correct status and, proceed to mark the residency status in Xero properly. Once set in the employee file in Xero Payroll, the employee’s PAYG withholding will update automatically for you and tax them correctly.
Now, here is the fun bit, working out which category to choose. The categories that Xero use, in accordance with the tax law are:
- Foreign Resident: People who are holidaying in Australia or visiting for less than 6 months that do not intend to migrate to Australia or to study long term here. Typically, we can say that everyone who holds a Visa Subclass 600 is a foreign resident.
- Working Holiday Maker: These are people that are under the Visas 417 and 462.
- Australian Resident: Every Australian or New Zealander or even temporary residents* that are not in the previous categories.
What to do next? After doing this, if you have anyone in the working holiday makers category, you MUST notify the ATO and be registered as employer of working holiday makers.
The most common industry affect by these changes are hospitality, but other industries that might be affect are tourism business, farming, businesses with seasonal workers.
But do not worry, we’re here to help you with this. Give us a call at BTNA and we’ll organise everything with the ATO and make sure your registration is completed.
Do not hesitate to contact us if you need any further information regarding this topic, we’re only a phone call away!
By The Numbers Accounting