Working Holiday Visa: Payslip Guide for Backpackers and Employers

Working Holiday Visas in Australia

Australia is one of the world's most popular destinations for working holiday makers (WHMs). Each year, hundreds of thousands of young travellers come to Australia on subclass 417 (Working Holiday) and subclass 462 (Work and Holiday) visas, working in hospitality, agriculture, construction, and other industries while exploring the country.

If you are a working holiday maker or an employer who hires them, understanding how payslips work for WHMs is essential. The tax rules are different, the employer has specific registration obligations, and getting it wrong can be costly.

WHM Tax Rates (2025-26)

Working holiday makers have their own tax rates, often referred to as the "backpacker tax." These rates are different from standard Australian resident rates:

Working Holiday Maker Tax Rates

Key differences from resident rates:

• No tax-free threshold — WHMs are taxed from the first dollar earned
• Lower starting rate — 15% flat on the first $45,000 (vs 16% above $18,200 for residents)
• No Medicare levy — WHMs are generally not subject to the 2% Medicare levy (they are not eligible for Medicare)

Comparison: WHM vs Resident Tax on $40,000 Annual Income

On $40,000, a WHM actually pays more tax than a resident. However, on lower incomes (below about $37,000), WHMs pay less because residents pay 16% on everything above $18,200 while WHMs pay only 15%.

Employer Registration Requirement

This is critical: To use the WHM tax rates, your business must be registered with the ATO as a Working Holiday Maker employer. If you are not registered, you must withhold at the standard foreign resident rate (which starts at 30% from the first dollar), significantly reducing the employee's take-home pay.

How to Register

1. Log in to the ATO Business Portal or your tax agent's portal
2. Navigate to "Register for working holiday maker employer"
3. Complete the registration form
4. Registration is usually processed within a few days

What Happens If You Are Not Registered

If you hire a WHM without being registered:

• You must withhold at foreign resident rates (30% from the first dollar)
• The employee receives much less take-home pay
• You may face ATO compliance action
• The employee may be able to claim a refund at tax time, but this creates problems for both parties

TFN Requirements for WHMs

Working holiday makers need a Tax File Number just like any other worker. They can apply for one:

• Online through the ATO website (before or after arriving in Australia)
• By phone through the ATO

If a WHM does not provide a TFN, the employer must withhold at 47% (45% + 2%), the same as for any other employee without a TFN. This is even higher than the foreign resident rate and will dramatically reduce take-home pay.

Advice for WHMs: Apply for your TFN as soon as you arrive in Australia (or even before you arrive, using your passport details). Processing takes up to 28 days, so do not wait.

What Appears on a WHM Payslip

A working holiday maker's payslip should include all the same information as any other employee's payslip under the Fair Work Act. However, there are some key differences:

Tax Withholding

• PAYG is calculated at the WHM tax rates (15% flat on first $45,000)
• No Medicare levy is withheld
• No tax-free threshold applies

Super

• Superannuation is paid at the same rate as for any other employee: 12% of OTE
• WHMs can claim their super back when they permanently leave Australia through a Departing Australia Superannuation Payment (DASP)
• DASP is taxed at 65% for WHMs (compared to 35-45% for other temporary residents)

Example WHM Payslip (Weekly)

Common Issues with WHM Payslips

1. Wrong Tax Rate Applied

The most common issue. If the employer is not registered as a WHM employer, or if the payroll system is not set up correctly, WHMs may be taxed at resident rates (with a tax-free threshold they are not entitled to) or at the higher foreign resident rate.

Solution: Ensure the employer is registered with the ATO as a WHM employer and that the payroll system is configured for WHM tax rates.

2. Cash-in-Hand Payments

Unfortunately, some employers in industries like hospitality and agriculture pay WHMs in cash without proper payslips. This is illegal and can result in:

• Fines for the employer
• Problems for the WHM at tax time
• Super not being paid
• No workers' compensation coverage

Advice for WHMs: Always insist on proper payslips and bank transfers. If an employer offers cash-in-hand, it is a red flag.

3. Underpayment

Some unscrupulous employers take advantage of WHMs' unfamiliarity with Australian workplace laws. Common forms of underpayment:

• Paying below the minimum wage ($24.10/hour)
• Not paying casual loading (25%)
• Not paying penalty rates for weekends/public holidays
• Not paying super

Advice: The Fair Work Ombudsman has a dedicated team for WHM complaints. You can report underpayment anonymously.

4. Incorrect Super Fund

WHMs may not have an existing Australian super fund. If they do not nominate a fund:

• Check for a stapled fund via the ATO
• If none exists, use the employer's default MySuper fund
• Remind the WHM they can claim DASP when leaving Australia permanently

DASP: Getting Your Super Back

When a working holiday maker permanently leaves Australia and their visa has expired or been cancelled, they can apply for a Departing Australia Superannuation Payment:

1. Leave Australia and wait for your visa to expire or be cancelled
2. Apply online through the ATO DASP application
3. Tax on DASP: 65% for WHMs (this is applied to the taxable component)
4. Processing time: 28 days from receiving a complete application

While losing 65% seems harsh, it is still better than leaving the money in a super fund where fees will gradually erode the balance, and you cannot access it until age 60.

End-of-Year Tax for WHMs

Working holiday makers must lodge an Australian tax return if they earned income during the financial year. This is done through myTax (via myGov) or through a registered tax agent.

Many WHMs are entitled to a tax refund if:

• Too much PAYG was withheld (e.g., wrong rate applied)
• They had work-related deductions (travel between work sites, uniform, tools)
• They worked for part of the year and the annualised withholding was too high

Several specialist tax agents in Australia focus specifically on WHM tax returns, often charging $100-$200 for the service.

Using PayslipMate for Working Holiday Makers

PayslipMate supports WHM-specific payslip generation:

• WHM tax rates are built in (15% flat rate on first $45,000)
• No Medicare levy applied for WHMs
• No tax-free threshold — tax calculated from the first dollar
• Super at 12% — same as all other employees
• Professional format that WHM employers and employees can keep for payroll and personal records

Whether you are an employer hiring backpackers or a working holiday maker wanting to verify your pay, PayslipMate has you covered. Create a WHM payslip now →