Anybody can hire a working holiday maker, especially where there is a need for labour for a short period of time. Agriculture, hospitality, construction and domestic services often use working holiday makers, or backpackers, to meet this demand.
Working holiday makers hold a visa subclass 417 (Working Holiday) or 462 (Work and Holiday) that allows them to work while in Australia. You should not employ or pay someone for work if they don’t have permission to work in Australia.
From 1 January 2017, the working holiday maker tax rate of 15% applies from the first dollar earned. They cannot claim the tax-free-threshold regardless of their residency status and must provide a tax file number (TFN), otherwise you need to withhold at the top rate of tax. 
Working holiday makers remain entitled to superannuation if they are eligible.
WHAT YOU NEED TO DO
To employ working holiday makers in Australia on a visa subclass 417 or 462, you:
- must register with the ATO to withhold at the working holiday maker tax rate before your first payment to a working holiday maker
- should check your worker has a visa subclass 417 or 462 using the Visa Entitlement Verification OnlineExternal Link service.
If you don't register, you must use the foreign resident withholding rates which start at 32.5% for the first $37,000. Penalties apply if you employ a working holiday maker with visa subclass 417 or 462 and you don't register as an employer of working holiday makers.
CHANGE IN TAX RATE FOR SUPER PAYMENTS TO WORKING HOLIDAY MAKERS
From 1 July 2017, departing Australia superannuation payments (DASPs) made to Working Holiday Makers (WHMs) will be taxed at 65%.
If you hold or have held a 417 or 462 visa, you are classified as a WHM.
Your total DASP will be subject to the 65% tax rate where:
- you hold or have held a 417 or 462 visa and had super contributed for you while working under either of these visas, and
- DASP is paid to you on or after 1 July 2017.
The 65% rate will apply to your total DASP amount, including any super you may have earned while working under a different visa. Payments made before 1 July 2017 will be taxed at the current rate, which is 38% for a taxed-element.
DASP applications are generally processed within 28 days. You can only submit an application once you have left Australia and your visa is cancelled or expired.
If you are a WHM and are considering submitting a DASP application, you may want to do so at your earliest convenience to allow super funds with the best opportunity to process and pay your claim.