Accountants with SME clients should be urging them to recall the new deadlines for employees on working visas to ensure compliance.
ATO issues stern reminder on new tax
The ATO has urged all business owners who currently employ a backpacker to register by the 31 January 2017, so they can apply the new tax rate.
From 1 January 2017, the new ‘backpacker tax’ of 15 per cent will be applied from the first dollar earned to any workers who hold a 417 or 462 visa.
The ATO’s assistant commissioner Michael Gleeson warned employers of working holiday makers to register by the January deadline via ato.gov.au and check their employee had the right visa before withholding at the new rate.
“Anyone currently employing someone on a 417 or 462 visa needs to register with the ATO by 31 January 2017 to use the new rate,” Mr Gleeson said.
“If you aren’t currently employing backpackers but will later in the year, you do not need to register by the deadline. You just need to register when you employ them.
“A registered employer should withhold at a rate of 15 per cent for the first $37,000 paid to a working holiday maker. An unregistered employer still has a withholding obligation but at standard foreign resident rates.”
Mr Gleeson said registering allowed the ATO to identify employers who were eligible to withhold tax at the concessional rate for backpackers.
“Knowing which employers have registered and are doing the right thing ensures we can focus our activities on working with employers of backpackers who are not withholding at the correct rate,” Mr Gleeson said.
“It’s quick and straightforward to register – it’s a simple online process and it will take about five minutes; we have already had about 8,350 registrations. We are seeing a steady stream of about 400 employers registering a day.”
Mr Gleeson said employers should also check their worker had the right visa, “to ensure they meet their obligations under the backpacker tax rules”, Mr Gleeson said.
“It’s better to register sooner rather than later, so don’t put it off,” Mr Gleeson said.
A worker’s visa status can be checked via the Visa Entitlement Verification Online (VEVO) service on the Immigration and Border Protection website.