The backpacker tax has been discussed for several years in Australia. The debate started a couple of years ago and was finally settled by reaching a compromise. However, the High Court of Australia ruled the backpacker tax of 15% violated a non discrimination article found in tax agreements concluded between Australia and certain countries. Here are all the information you need to know about it and the current rates applied to backpackers depending on their nationality.
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Official Tax Withholding Rates for Working Holiday Makers
Backpackers on visa subclasses 417 or 462 are subject to a specific tax system. Working holiday visa holders are taxed on a progressive tax scale without the benefit of a tax-free threshold (for most of them – see below).
Companies must register as employers of working holiday makers by completing a specific form. Make sure that your employer is registering you as a working holiday visa maker otherwise you will be taxed 30% (foreign resident rate).
Regular Tax Withholding Rates
Visas 417 and 462 are taxed 15% for the first $45 000 of their income. Over this amount, they are taxed 30% as any Australian.
Employers registered as WHM employers with the ATO must use these progressive rates.
These rates apply to working holiday maker income regardless of residency for tax purposes (rates 2025-2026)
| Taxable income | Tax on this income |
|---|---|
| 0 – $45,000 | 15% |
| $45,001 – $135,000 | $6,750 plus 30 cents for each $1 over $45,000 |
| $135,001 – $190,000 | $33,750 plus 37 cents for each $1 over $135,000 |
| $190,001 and over | $54,100 plus 45 cents for each $1 over $190,000 |
Unlike Australian residents, backpackers do not benefit from the tax-free threshold (typically $18,200). That means you pay tax from your very first dollar earned.
The “backpacker tax” structure aims to simplify and differentiate WHM taxation, but still entails tax returns to potentially optimize deductions.
Special Rates for WHMs from NDA Countries
The backpacker tax has been contested and in Addy v Commissioner of Taxation [2021] HCA 34, the High Court has found that the ‘backpacker tax’ is not in accordance with Australia’s treaty obligations with the United Kingdom, violating the non-discrimination article (Article 25(1) of the UK DTA).
The ATO recognizes that Working Holiday Makers who are Australian tax residents and citizens of Non‑Discrimination Article (NDA) countries may be taxed on the same basis as Australian residents, not at WHM rates
Eligible NDA Countries (as of 2026):
- Chile,
- Finland,
- Japan,
- Norway,
- Turkey,
- the UK,
- Germany (from 2017-2018)
- Israel (from 2020–21).
The double tax agreements between Australia and these countries contain similar non-discriminatory clauses. Meaning that citizens from those countries are entitled to be taxed on the same basis as Australians resident (and therefore benefit from the tax-free threshold).
Conditions to qualify:
- Hold a 417 or 462 Working Holiday visa
- Be an Australian tax resident
- Be a citizen of one of the NDA-listed countries above
Tax Rate – Residents 2025-2026
| Taxable income | Tax on this income |
|---|---|
| $0 – $18,200 | Nil |
| $18,201 – $45,000 | 16c for each $1 over $18,200 |
| $45,001 – $135,000 | $4,288 plus 30 cents for each $1 over $45,000 |
| $135,001 – $190,000 | $31,288 plus 37 cents for each $1 over $135,000 |
| $190,001 and over | $51,638 plus 45 cents for each $1 over $190,000 |
Note: from 1 July 2026 (the 2026-27 year), the second tax bracket drops to 15%. These rates apply to the 2025-26 return you’re lodging now.
More information on the ATO website.
Key Things WHMs Need to Know
- TFN Declaration: You must provide your Tax File Number (TFN) and employer must register as a WHM employer. Without this, higher withholding rates (up to 45%) will apply.
- No Tax-Free Threshold: WHMs are taxed from the first dollar.
- Tax Return Filing: Even if your income is under A$45,000, you might still want to file to claim deductions or if you’re a tax resident from an NDA country.
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How to Claim your Tax Back ?
The Australian financial year runs from 1st July to 30th June each year. Tax returns can be lodged any time from 1st July to 31st October, for the previous financial year.
A simple tax calculator is available to help you calculate the tax on your taxable income on the ATO website. The Income tax estimator gives you an estimate of the amount of your tax refund or debt.
For the 2025-26 financial year (1 July 2025 – 30 June 2026), you can lodge your return from 1 July 2026, and the deadline to lodge yourself (via myTax) is 31 October 2026. If you use a registered tax agent, you can usually lodge later but you need to be on their books before 31 October.
For more information and the process to follow to claim your tax back, visit How to claim your tax back in Australia
The Superannuation
Superannuation is a way to save for retirement. As a working holiday maker, your employer also has to pay superannuation for you. You are entitled to receive super contributions from an employer if you are at least 18 years old. The super contributions paid by your employer must be 12% of your ordinary earnings.
When you leave Australia, you can apply to have your super paid to you as a departing Australia superannuation payment (DASP). However, you will have to pay a tax on any DASP made to working holiday makers. Indeed, after leaving the country, you will be able to claim your superannuation back BUT it is taxed at 65%. For example, if you accumulated around $4,000 in super, the 65% DASP tax means you’d receive roughly $1,400 back. You can only claim a DASP after you’ve left Australia and your visa has expired or been cancelled, through the ATO’s online DASP portal.
New from 1 July 2026: “Payday Super”: Until mid-2026, employers only had to pay super quarterly. Under the new Payday Super rules, your employer must now pay your super at the same time as your wages, every payday, with the money reaching your super fund within 7 business days. This makes it much easier to check you’re being paid correctly, compare the super on your payslip against what actually lands in your fund, and raise anything missing with your employer or the ATO as soon as possible. Around $5 billion in super goes unpaid each year, so it’s worth checking.
For more information on superannuation in Australia : How to claim your superannuation leaving Australia
For more information on the backpackers tax : AOT website
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