Working Holiday Makers (WHMs) are temporary visitors to Australia who hold either a subclass 417 (Working Holiday) or subclass 462 (Work and Holiday) visa. Employing WHMs involves specific obligations around tax withholding and how their employment is reported to the Australian Taxation Office (ATO) through Single Touch Payroll (STP).
This article explains how to configure PaySauce to correctly handle Working Holiday Maker employees.
⚠️ ATO Registration
Before setting up a WHM in PaySauce, you must be registered with the ATO as a Working Holiday Maker employer. If you are not registered, you are legally required to withhold tax at the higher foreign resident rate, which starts at 32.5%. Registered employers withhold at the WHM rate of 15% on the first $45,000 of earnings. You can register through the ATO's online services.
Step 1: Enable WHM in your company settings
Once registered with the ATO, you need to turn on the WHM feature in PaySauce before the correct tax tables become available.
Go to Company Settings.
Tick Working Holiday Maker Registered Employer (near the bottom of the page).
Select Update.
Note: If you have not marked that you are a Working Holiday Maker Registered Employer, then all Working Holiday Maker employees will be taxed at the higher rate as per the ATO’s specifications.
Step 2: Set up the employee's profile
With the company setting enabled, you can configure the employee's profile.
Open the employee's profile.
Set Resident Status to Working Holiday Maker.
Set Tax Category to Working Holiday Maker.
Select the employee's Country of Tax Residency from the dropdown. Typing the first letter of the country name will jump to that section of the list.
Set Income Stream Type Code to Working Holiday Maker.
Select Update to save.
Common questions
What happens if I haven't registered with the ATO?
What happens if I haven't registered with the ATO?
If your company settings don't have Working Holiday Maker Registered Employer ticked, PaySauce will apply the higher foreign resident tax rate to all WHM employees, as required by the ATO. Make sure you complete ATO registration before processing any pays for these employees.
What's the difference between the two WHM visa types?
What's the difference between the two WHM visa types?
Both the subclass 417 (Working Holiday) and subclass 462 (Work and Holiday) visas are treated the same way for payroll purposes. The setup process in PaySauce is identical for both.
How is the WHM rate reported to the ATO?
How is the WHM rate reported to the ATO?
PaySauce includes the required WHM identifiers in your STP transmissions automatically, once the employee's profile is configured as above. You don't need to take any additional steps for STP reporting.