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Re: Taxation of someone on a Working Holiday Visa 417

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Newbie

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Hello. I wonder if someone might help me ? I am trying to help my daughter with her tax affairs. She has been in Australia on a Working Holiday Maker Visa 417 since Jan 2017. She has had two jobs in that time and I'm trying to ascertain how much she should have been taxed and whether she should file a 17/18 tax return. When I read the ATO online guidance back in December 2017, it was very clear that you could be an Australian resident for tax purposes despite being on a WHM visa. In fact Example 6 in their guidance "Working holiday makers" gave such an example. By the time she started the second job in April 2018, her circumstances more than satisfied the Australian resident criteria and she considered herself to be one so she ticked the box on the TFN Declaration form to say she was an Australian resident. So given the ATO guidance I'd read in Dec 2017, I expected her to receive tax free allowance of $18,200 and then be taxed at 19% up to $37,000. 

 

Now it is  2017-2018 Tax Return lodging time, I have re-read the ATO guidance and it seems to have changed. The same guidance "Working holiday makers" now says that if you are on a WHM visa you will be treated as a WHM for tax purposes ie. no tax-free allowance and 15% on everything up to $37,000. They have even changed their Example 6 to follow this new line. The guidance for "Employers of Working holiday makers" also says "Someone can claim they are an Australian resident for tax purposes to obtain the tax-free threshold. However, the tax rate of 15% will override their selection if they are working in Australia on a visa subclass 417". Moreover, the Dec 17 advice to Working Holiday makers says "you'll be obligated to file a tax return each year" whereas the current advice (Oct18) says you don't need to file a return if a) you received all your income whilst a WHM and b) you earnt less than $37,001

 

Here are my questions : What is the correct situation ? Is it common knowledge that the ATO have changed their advice ? Is there a touch of them making it up as they go along ? What should my daughter be taxed and does she have to file a 2017-18 tax return ? She has earnt under $18,200 tax thershold so if the old ATO guidance applies, she should get a tax refund. However, if the new guidance applies AND her employer may not have registered to apply the 15% WHM rate (as I suspect) , there is a danger she could get hit for 32.5% tax. Any advice would be welcome. Thank you

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ATO Certified

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Hi @jenny2,


Welcome to our Community and thanks for your questions!  We can provide general information here on our Community and tax and super topics, however your query is more complex and we'd need more information to be able to provide a definite answer.

 

@macfanboy has provided some great advice! If you'd like to receive a more tailored response relating to your daughters specific situation, you can write to us to request a private binding ruling. Private rulings are binding advice from us that explains our view on how tax law applies to a specific situation. They are a free service and we aim to response within 28 days from receiving your request.

 

I hope this helps, JodieM

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Devotee

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It all basically depends on what were her intentions when she arrived.

 

https://www.ato.gov.au/Individuals/Ind/Resident-for-tax-if-WHM-/?=redirected

 

If the example 6 matches your daughter then she would be considered an Australian Resident from arriving in Jan 2017.

 

I would also request an Private ruling from the ATO to be 100% sure, ensure that she provides as much information as possible especially with respect to "Factors To Consider" in the above link.

The private ruling is free.

 

Also, if you are not considered to be an australian resident for tax purposes on a 417 visa and earn less than $37,00 then you MAY not lodge a tax return, I would especially if I had work related expenses that I could claim.

 

 

Newbie

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Thanks Macfanboy. I have since read that all people on 417 visas will be taxed by the ATO as a Working Holiday Maker (ie 15% on every dollar earned up to $37K) IRRESPECTIVE of their residency status/claim. Can anybody confirm this is the ATO's consistent policy ? If so, it's my understanding that there's no point in pursuing the residency issue (apart from the Medicare levy). Am I correct ? 

Best answer

ATO Certified

Moderator

Replies 0

Hi @jenny2,


Welcome to our Community and thanks for your questions!  We can provide general information here on our Community and tax and super topics, however your query is more complex and we'd need more information to be able to provide a definite answer.

 

@macfanboy has provided some great advice! If you'd like to receive a more tailored response relating to your daughters specific situation, you can write to us to request a private binding ruling. Private rulings are binding advice from us that explains our view on how tax law applies to a specific situation. They are a free service and we aim to response within 28 days from receiving your request.

 

I hope this helps, JodieM

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