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Working Holiday Maker tax changes – what employers need to know

20 February 2017

On 1 January 2017, the ATO introduced new rules for working holiday makers, making them no longer eligible for the tax-free threshold. We understand how challenging these changes are for our customers and are working hard on updates to Sage MicrOpay and Sage WageEasy. Here we explain the new rules, how you can ensure compliance, when Sage will release software updates, and what else the ATO has in store for 2017.

What are the new rules?

Since the new rules came into effect on 1 January 2017, working holiday makers on 417 or 462 visas are now taxed at a flat rate of 15 percent for the first $37,000 of their earnings. However, if their employer fails to register online with the ATO, a tax rate of 32.5 percent applies.

What does this mean for employers?

To be able to withhold the right amount of tax and avoid possible penalties, employers must register online with the ATO. Employers now also have a legal obligation to know the visa status of their workers. For more information about changes to the working holiday maker tax rate and your obligations as an employer, please visit the ATO website.

When will Sage release software updates?

We know these changes make life difficult for many of our customers. Given the short notice and uncertainty around the requirements, our team is still working on updates to Sage MicrOpay and Sage WageEasy. Set for release in March 2017, these updates will make it quick and easy to pay your employees and comply with the new rules. In the meantime, to ease the burden for you we’ve put together two short guides to help you accommodate the new rules:

What other tax changes are in store for 2017?

The ATO’s next major initiative is Single Touch Payroll, which will launch on 1 July 2017. Designed to simplify business reporting obligations, Single Touch Payroll will allow employers to report salary or wages, pay as you go (PAYG) withholding and super information to the ATO from their payroll solution, at the same time they pay their employees. We are currently working with the ATO to see how we can integrate Single Touch Payroll into Sage solutions and simplify the initiative for our customers.

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