PAYG withholding for non-residents

If you're a foreign resident for Australian tax, your employer withholds tax from your salary under PAYG (Pay As You Go). As a non-resident you do not get the tax-free threshold, so tax applies from the first dollar of Australian-sourced income.

Foreign-resident rates are different from resident rates, and you don't pay the Medicare levy. Working holiday makers on a 417 or 462 visa have their own scale: 15% on the first $45,000, then resident marginal rates above that.

The working holiday rate isn't automatic

Use the working holiday rates if you are a foreign resident for tax, or an Australian resident who is not a national of a non-discrimination article (NDA) country. Nationals of Chile, Finland, Germany, Israel, Japan, Norway, Turkey or the United Kingdom who are Australian residents for tax purposes are taxed on the same basis as a resident Australian national instead — which means the tax-free threshold rather than 15% from the first dollar. The High Court decided that in Addy v Commissioner of Taxation on 3 November 2021. If that might be you, check your residency before assuming the backpacker rate is your answer. ATO — resident WHMs from NDA countries.

If your employer isn't registered, 30% comes out instead

Your employer has to be registered with the ATO as an employer of working holiday makers to use the 15% rate. If they are not registered they must withhold 30% from every dollar you earn up to $135,000, and foreign-resident rates above that — so an unregistered employer is the usual reason a backpacker's pay looks far lower than this calculator says. You claim the difference back when you lodge your tax return. ATO — employers of working holiday makers.

Check which scale is yours first

Everything above assumes you are a foreign resident for tax. Plenty of temporary visa holders are not — the ATO treats an overseas student enrolled in a course of 6 months or more as usually being an Australian resident for tax purposes, and someone on a long-term work visa who has settled here is generally a resident too. Both get the tax-free threshold and resident rates, so withholding on the foreign-resident scale would take far too much from every pay. Run the tax residency quick check before you fill in a TFN declaration, and if you are a student start at the international student tax calculator, which covers both scales.

To see how much is withheld and what you take home, use our salary tax calculator with "Non-resident" or "Working Holiday Maker" selected — quick links for temporary resident take-home and the working holiday maker tax calculator are below.