Australia Working Holiday: Taxes – The Last Thing on Your Mind

You’re in Australia and the last thing you want to think about if you’re a backpacking tour guide, a city bartender or working at a new beachside surf club, is how to negotiate your working holiday tax return.

Whether you are mixing work with leisure, or working under resident vs. non-resident status, virtually every working holiday traveller to Australia is charged a traveller’s working holiday tax. Some call it the “Oz Tax,” but the Australian Working Holiday Tax, administered by the Australian Tax Office (ATO), is a tax fact.

If you were thinking of just dodging the tax upon your return home, know that this tax is mandatory and the ATO has the authority to levy a fine for failing to lodge a tax return. However, go through the correct stages of filing a tax return, and you could find yourself with a nice monetary bonus you were not expecting after your departure from the land down under.

How does the tax work?

First, The tax may claim up to 37 percent of your total working holiday earnings. Any fines for failure to lodge, or lodging late are assessed on top of the tax. The Australian tax year ends on June 30, but you are allowed to lodge immediately at the end of your working holiday, even if prior to June 30. You have 3 months allotted to prepare and submit your tax return. Effectively, the deadline is no later than September 30. It pays to file as soon as possible.

How do I file my tax return?

You have optional services available for preparing and lodging your tax return – the ease/difficulty of their use and the fees involved for each vary from service to service.  Here’s a breakdown of the most popular resources. Note that the fee structure reflects only the fees for assistance with preparation and lodging. It does not reflect any taxes or penalties levied by the ATO.

Do It yourself (ATO)

While appearing to be the most attractive, since there are no fees to pay anyone else, you will be limited in the help you can receive; not knowing if you have filed out the form correctly and having only a telephone-only customer support service at hand.

Backpackerbuddy

Backpackerbuddy has been around long enough to develop a robust web access for preparation and lodging, but it still requires some paper to prep, sign and file along with the online forms. They charge up to $495 for an accelerated filing (about half for normal), plus 10 to 18 percent of your refund, and a 10 percent Goods and Services Tax. Backpackerbuddy is relatively easy to use, but operates in only one language (English). They do, however, add email customer support to the standard telephone approach.

Taxback

From a cost perspective, Taxback is potentially a better bargain with a 9% fee of your overall refund, plus administrative costs of 1.8%. However, unlike Backpackerbuddy, there is no fee if you do not have a tax refund.

Pinkcow

With Pinkcow, you have the option of a flat, upfront payment of $99, or automatic payment from your refund of $129, regardless of the refund amount. All fees are waived if you have no refund, and the entire exercise is accomplished online (which means no paper to file). Operating in seven languages, and with customer service by email or telephone, it’s rated as one of the easiest services to use.

Taxes are, and should be, the last thing on your mind when on holiday, but they are a reality to be dealt with after all the fun winds down. Settle your refund in due time and with ease with the resources available to you… leaving you with ample time, and maybe some unexpected funds, from which to plan your next great adventure.