As we’re in the midst of the tax season, there’s no better time to review how tax returns work, particularly for those of you embarking on or completing a working holiday. This article aims to shed light on the tax return process for Working Holiday Makers (WHMs), including any potential deductions you may be entitled to.

Before we delve into the details, it’s important to note that this guide is based on information provided by the Australian Taxation Office (ATO) as of our knowledge cutoff in September 2021. We strongly advise you to check the ATO website for the most current tax guidelines.

Understanding Your Tax Residency

The first step towards understanding your tax obligation is determining your tax residency. As a WHM, the ATO usually considers you a foreign resident for tax purposes. This is important as it affects your tax-free threshold, the tax rates applied to your income, and your obligation to declare income.

Income and Tax

In Australia, the financial year runs from 1 July to 30 June, and you have until 31 October to lodge your tax return. If you earned income in Australia during this period, it’s likely you’ll need to lodge a tax return.

Since 1 January 2017, the tax rate applicable for WHMs (also known as the ‘backpacker tax’) is 15% from the first dollar you earn up to $45,000. Income earned above this amount is taxed at ordinary rates. Please note, as a foreign resident, you’re not entitled to claim the tax-free threshold.

Your Tax File Number (TFN)

In Australia, you’re required to have a Tax File Number (TFN). If you haven’t already applied for a TFN, you can do so through the ATO’s online registration system. This is your personal reference number in the tax system, which allows you to start or resume work, lodge a tax return, apply for government benefits, among other services.

Deductions You Can Claim

While you may not be entitled to the tax-free threshold, there are various deductions you may be able to claim to reduce your taxable income. Remember, for these claims, it’s crucial to keep a record of all related receipts or proof of purchases. Here are some potential deductions:

• Work-Related Expenses: You can claim expenses directly related to earning your income. For instance, if you’ve had to buy tools or equipment for your job, these costs could be deductible.
• Vehicle and Travel Expenses: If you have to travel for your work, or use your own car for work-related tasks (excluding travel to and from work), you may be eligible to claim these costs.
• Clothing and Laundry: You may be able to claim the cost of work-specific clothing, protective gear, or even the costs to clean such clothing.
• Self-Education: If you’ve undertaken any self-education or courses that directly relate to your current job, these could be deductible expenses.
• Home Office Expenses: If you’re required to work from home, you might be able to claim a portion of your expenses for heating, cooling, lighting, and even your internet costs.
• Union Fees and Professional Associations: If you’ve joined a union or professional association related to your work, these costs may also be deductible.

Superannuation

One of the benefits of working in Australia is that your employer should be contributing to your superannuation if you’re eligible. If you’re leaving Australia permanently and are not an Australian or New Zealand citizen, or a permanent resident, you may be able to claim the superannuation paid during your stay through a Departing Australia Superannuation Payment (DASP