Australia is one of the most popular working holiday destinations in the world. Every year, hundreds of thousands of backpackers arrive on 417 and 462 visas, ready to explore the country while picking up work along the way — fruit picking in Queensland, hospitality in Sydney, farm work in the outback, or barista jobs in Melbourne.
But here is the thing a lot of working holidaymakers do not think about until it is too late: tax. Australia has specific tax rules for people on working holiday visas, and they work differently from what most residents pay. Understanding these rules from the start can save you a lot of confusion (and money) when tax time rolls around.
The Working Holiday Tax Rate
If you are on a subclass 417 (Working Holiday) or 462 (Work and Holiday) visa, you are classified as a "working holiday maker" for tax purposes. This means you pay tax at special rates, regardless of how long you have been in Australia:
- $0 – $45,000: 15%
- $45,001 – $135,000: 30%
- $135,001 – $190,000: 37%
- $190,001 and above: 45%
The key difference from resident rates is that there is no tax-free threshold. Australian residents do not pay any tax on their first $18,200 of income. Working holiday makers pay 15% from the very first dollar. So if you earn $30,000 during your time in Australia, you will pay $4,500 in tax (15% of $30,000).
This flat 15% rate on the first $45,000 is actually not too bad — it is lower than what a resident would pay on income between $18,201 and $45,000 (which is 16%). But the lack of a tax-free threshold means you are paying tax from dollar one, whereas a resident earning $30,000 would only pay tax on $11,800 of that.
You can see exactly how much tax you will pay on your working holiday earnings using our working holiday tax calculator.
Getting Your Tax File Number (TFN)
Before you start working, you need to get a Tax File Number (TFN). This is a unique number issued by the ATO that identifies you for tax purposes. You can apply for one online through the ATO website as soon as you arrive in Australia — you just need your passport and visa details.
Getting a TFN is free and usually takes about a week. Once you have it, give it to every employer you work for. If you do not provide a TFN, your employer is required to withhold tax at the highest rate (45% plus Medicare levy), which means you will lose nearly half your pay to tax. You can get it back when you lodge a tax return, but it is much easier to just get your TFN sorted from the start.
Do You Pay Medicare Levy?
Most working holiday makers do not pay the 2% Medicare levy. If your country has a reciprocal health agreement with Australia (which includes the UK, Ireland, New Zealand, Belgium, Finland, Italy, Malta, Netherlands, Norway, Slovenia, and Sweden), you can access Medicare and will need to pay the levy. If your country is not on the list, you are exempt from the Medicare levy but will need private health insurance.
Our Medicare levy calculator can help you work out whether the levy applies to you and how much it would be.
Superannuation on a Working Holiday
If you earn more than $450 in a calendar month from a single employer (which most working holiday makers do), your employer must pay the Superannuation Guarantee on your behalf — currently 12% of your ordinary time earnings. This money goes into a super fund, and you probably will not see it while you are in Australia.
But here is the good news: when you permanently leave Australia, you can claim your super back through a Departing Australia Superannuation Payment (DASP). The ATO will refund the balance of your super fund, though they will tax it at a flat rate of 65% for working holiday makers (or 35% for the taxed element from a taxed fund).
Yes, that 65% tax rate stings. But it is still money you would not have had otherwise. To claim your DASP, you need to have actually left Australia, your visa must have expired or been cancelled, and you apply through the ATO website. Make sure you keep your super fund details and your TFN — you will need them. Our superannuation calculator can help you estimate how much super you will accumulate during your stay.
Lodging Your Tax Return
Even if you only worked in Australia for a few months, you need to lodge a tax return for the financial year (1 July to 30 June). You can do this online through myTax (the ATO's online lodgement system), and it is free.
Many working holiday makers are entitled to a tax refund. This happens when your employer has withheld more tax from your pay than you actually owe. For example, if you worked for multiple employers during the year and each one withheld tax assuming you would earn above $45,000 (at a higher rate), but your total income was actually lower, you may have been overtaxed.
You can also claim deductions for work-related expenses — things like protective clothing, tools, travel between work sites, and union fees. Every dollar you claim reduces your taxable income and increases your refund.
There are plenty of companies that offer to lodge your tax return for you, often targeting backpackers at hostels and airports. Be cautious — some charge high fees or take a percentage of your refund, which is not great value when you could do it yourself for free through myTax.
Common Mistakes Working Holiday Makers Make
- Not getting a TFN before starting work. Without one, you will be taxed at 45%. Always get your TFN first.
- Ticking the wrong box on the TFN declaration. Your employer should identify you as a working holiday maker. If they do not, the wrong tax rates may be applied.
- Not lodging a tax return. Even if you think you do not owe anything, you might be entitled to a refund. Lodge your return.
- Paying too much for tax return services. You can lodge for free through myTax. Do not let someone take a percentage of your refund.
- Forgetting to claim your super when you leave. That DASP money is yours — do not leave it behind.
What About Registered Employers?
The working holiday tax rates only apply if your employer is registered with the ATO as a "registered employer of working holiday makers." Most legitimate employers are, but if they are not, you could be taxed at non-resident rates instead (which start at 30% from dollar one — much higher than the 15% working holiday rate).
If you suspect your employer is not registered, or if your pay seems to have too much tax taken out, check with the ATO or use our working holiday tax calculator to compare what you should be paying against what is actually being withheld.
Quick Checklist for Working Holiday Makers
- Apply for your TFN as soon as you arrive
- Give your TFN to every employer and make sure they tick the working holiday maker box
- Keep records of all your income and work-related expenses
- Lodge a tax return after 30 June (even if you have left Australia — you can do it online from overseas)
- Claim your super back through the DASP process when you permanently leave
- Use our salary calculator to check what your take-home pay should be
The Bottom Line
Tax on a working holiday does not have to be stressful. The 15% flat rate on your first $45,000 is straightforward, and if you keep good records and lodge your return, you might even get a refund. Get your TFN sorted, understand the rules, and make the most of your time in Australia — both the adventure and the earnings.