As a backpacker, it can be difficult to know where you stand in terms of Australian residency for tax purposes.
You’re not exactly a tourist. So does that make you an Australian resident? And more importantly, will you have to pay tax like an Australian resident if you work here?
The short answer is yes.
If you work in Australia you need to pay tax regardless of being a foreign or Australian resident for tax purposes.
But it’s not the end of the world, working holiday tax rates start at 15% (15c for each $1 you earn) for annual incomes of up to $37,000.
See the table below for working holiday-maker tax rates 2018-19, 2019-20, 2020-21 and 2021-22.
|TAXABLE INCOME||TAX ON THIS INCOME|
|$0 – $37,000||15c for each $1|
|$37,001 – $90,000||$5,550 plus 32.5c for each $1 over $37,000|
|$90,001 – $180,000||$22,775 plus 37c for each $1 over $90,000|
|$180,001 and over||$56,075 plus 45c for each $1 over $180,000|
Use our tax calculator for backpackers to see how much tax you will need to pay. Simply enter your expected annual income and tick the Working Holiday visa option to calculate how much tax you need to pay.
Do backpackers need an Australian visa?
Unless you are a resident of New Zealand (or Australia), you will need a visa to enter Australia. This visa can span anywhere from three to 12 months.
Some backpackers choose to come to Australia on a Visitor Visa (subclass 600). With this visa type, you can choose a three, six or 12-month trip, but you are not allowed to work in Australia with a Visitor Visa.
So if your intention is to work, you will need to apply for a Working Holiday Visa (Subclass 417 or 462).
- 417 (Working Holiday)
- 462 (Work and Holiday)
The 417 and 462 visas are common among backpackers. If, like most of us, you can’t afford to spend three to six months without income, this allows you to work while you backpack your way through Australia. It actually gives you a full year to legally work in Australia, but you can generally only work for six months with one employer. And you can even leave Australia and return during this 12-month period.
The Working Holiday Visa is perfect for backpackers who want to split their time between Australia and New Zealand.
But you should know...
The clock doesn’t start when you arrive in Australia. It actually starts from the day your visa is issued.
Also, before you can work in Australia, you need to apply for an Australian Tax File Number (TFN), your reference number in the tax system. You can apply for a TFN after you have your work visa. Apply for a TFN
Superannuation for backpackers
Here’s some great news about working in Australia.
If you earn more than $450 per month, your employer will have to pay 9.5% of your earnings into your superannuation fund.
Superannuation is Australia’s version of a pension fund. And it’s mandatory for employers to contribute.
You can claim your super after leaving Australia if you have been here on an eligible temporary resident visa and have left after the visa expired.
Don’t make the mistake of thinking you won’t be responsible for taxes during your backpacking trip to Australia. If you’re making money in this country, you will need to pay tax.
And if you have any questions about your income tax liability while you’re here, consult a tax professional to discuss your individual case.