Taxes and superannuation 101 for working holiday makers in Australia

Tax returns and tax refunds in Australia

If you paid too much tax on your income during the fiscal year, you may get some money back after lodging your tax return.

Who has to lodge a tax return?

WHV holders don’t necessarily have to lodge a tax return at the end of the fiscal year.

You do not have to lodge a tax return if both of the following apply:

• All your income was earned as salary and wages (i.e. as an employee); and
• Your total taxable income for the fiscal year (July 1-June 30) was less than $45,001

You do have to lodge a tax return if:

•  You earned income as a self-employed individual; and/or
• Your total income for the fiscal year (July 1-June 30) was more than $45,000

You can lodge a tax return if you think too much was withheld from your pay and you could be eligible for a refund.

Who gets a tax refund—and why

Before 2017, WHV holders looked forward to lodging a tax return because in many cases, they were sure to get a refund. Most of the time, WHV holders were taxed more than they should have been and lodging a tax refund was the chance to finally get the extra money withheld on their pay cheque—surprise, we owed you money, here is the overpayment, you now have enough to take a side trip to South-East Asia!

But in 2016, the Australian Taxation Office (ATO) announced a tax rules change for temporary working holiday makers. As of 1 july 2020, working holiday makers are taxed at 15% on earnings up to $45,000 (earnings up to 37 000 previously, before 2020-2021 fiscal year). It’s now rare to get a tax refund unless:

• The wrong tax rate was applied and you overpaid taxes
• You can claim deductions for some of your expenses

Typical calculation mistakes

Sometimes, backpackers pay too much tax… or don’t pay enough and end up owing money to the ATO.

For instance, if you didn’t provide your first employer with a Tax File Number (TFN) within 28 days, your employer had to withhold 45% of any payment made to you.

Or if your employer didn’t register as an employer of working holiday makers, tax may have been withheld on your pay cheque at 32.5%.

In both of the examples above, you can lodge a tax return at the end of the fiscal year (or earlier if you won’t be in Australia in June) to claim the overpayment back.

Tax deductions you may be entitled to

You may be entitled to claim deductions for some expenses if:

• you spent the money yourself and weren’t reimbursed
• the expenses directly relate to earning your income
• you have a record to prove you spent the money

These are examples of expenses for which you may be able to claim a deduction:

• Vehicle and travel expenses (although note that typical home-to-work and work-to-home commute expenses are usually not eligible)
• Clothing, laundry and dry-cleaning expenses (conventional clothing isn’t eligible but occupation-specific clothing, protective clothing and unique, distinctive uniforms are, for more details read this PDF document Clothing and laundry)
• Home office expenses (for remote employees working from home)
• Self-education expenses related to your current work activities (note that these expenses are broken into five categories. If all of your self-education expenses are “category A” items then you have to reduce your deduction by $250, more details below for RSA certificates and the mandatory White Card in construction)
• Tools, equipment and other assets
• Other work-related deductions (e.g. books, Internet and phone expenses, conferences, union fees, etc.)

Here are typical examples of expenses you may have incurred and weren’t reimbursed for:

• Work uniform or protective clothing (e.g. safety-coloured vests, steel-capped boots, gloves, apron, etc.)
• Picking bag and spinnet for grape picking
• Sunscreen and a hat for fruit picking jobs
• Gas expenses when you use your own vehicle for work-related duties, like deliveries or going to a meeting
• Bus, train or plane tickets when travelling for work (e.g. to attend a tradeshow or to meet a client)
• Expenses when you use your own phone or Internet plan for work purposes (job-hunt activities can’t be claimed!)

Expenses not eligible for deductions

However, note that the following expenses are not eligible for deductions:

• Car expenses (fuel, maintenance) or public transportation expenses for regular trips between home and work because your daily commute is considered “private travel”
• Car expenses (fuel, maintenance) or public transportation expenses for trips related to your job search
• Education and training expenses related to a job search
• The cost of purchasing or cleaning clothes you bought to wear for work that are not specific to your occupation—for instance, swimwear for a swimming instructor or black pants/white shirt for a bartender is considered “everyday in nature.”
• Meals bought during your regular work hours (but you can claim a deduction for overtime meals)

Keeping records of expenses

If your total claim for work-related expenses is more than $300 ($150 for clothing expenses), you must have written evidence to prove your claims, so make sure to keep receipts or invoices. The receipts must show the name of the supplier, the amount of the expense, the nature of the goods or services, the date the expense was paid and the date of the document and you’re supposed to keep them for five years in case the ATO asks for proof.

The ATO may also check with your employer to make sure you weren’t reimbursed for your claimed expenses.

Are the Responsible Service of Alcohol course for the RSA certificate and construction induction training for the White Card eligible expenses?

Short answer—depends. Most businesses offering these trainings assure that anyone who pays tax in Australia can claim expenses for all educational courses and that such training is tax deductible. However, there’s some fine print conveniently not mentioned.

Keep in mind that for work-related self-education expenses, the deduction is reduced by $250. In other words, the first $250 is not deductible. So if the RSA training course is $160, the training is not deductible. If the same course is $350, you may be able to deduct $100.

The ATO also states that self-education expenses must relate to your current work activities as an employee. Your expenses won’t be eligible for a tax deduction if you currently work as a fruit picker and you’re taking the RSA training course to become a bartender. On the other hand, if you work as a server and your employer requires you to take the RSA training course, the cost of the training will be tax deductible.
If you’re lodging a tax return, it doesn’t hurt to list all the courses you paid for, if applicable. Tax law is complicated—who knows, you could get some deductions.

Any other common expenses I may be able to claim?

You can claim a tax deduction for donations of $2 or more made to “deductible gift recipients” (DGRs), i.e. organizations entitled to receive tax deductible gifts. However, you cannot receive any material benefit in return—so your charity lottery ticket or the t-shirt you bought at the Salvation Army charity shop is not an eligible expense.

When you make a donation, the DGR will usually issue you with a receipt—keep it as a proof.

“Cost of managing tax affairs” is tax deductible. If you hire a tax agent to prepare and lodge your tax return, you can claim the fees you’re paying for the service—or rather, the tax agent will claim the fees they charge when they prepare your tax, cause that’s the kind of move you’re paying them for!