Income Tax Rates Amendment (Working Holiday Maker Reform) Act 2016

No. 92, 2016

An Act to amend the Income Tax Rates Act 1986, and for related purposes

Contents

1 Short title 1

2 Commencement 2

3 Schedules 2

Schedule 1—Amendments 3

Part 1—Amendments 3

Income Tax Rates Act 1986 3

Part 2—Application of amendments 6

Income Tax Rates Amendment (Working Holiday Maker Reform) Act 2016

No. 92, 2016

An Act to amend the Income Tax Rates Act 1986, and for related purposes

[Assented to 2 December 2016]

The Parliament of Australia enacts:
1 Short title

This Act is the Income Tax Rates Amendment (Working Holiday Maker Reform) Act 2016.
2 Commencement 1

Each provision of this Act specified in column 1 of the table commences, or is taken to have commenced, in accordance with column 2 of the table. Any other statement in column 2 has effect according to its terms.
Commencement information Commencement information Commencement information
Column 1 Column 2 Column 3
Provisions Commencement Date/Details
1. The whole of this Act The day this Act receives the Royal Assent. 2 December 2016

Note: This table relates only to the provisions of this Act as originally enacted. It will not be amended to deal with any later amendments of this Act.

 2

Any information in column 3 of the table is not part of this Act. Information may be inserted in this column, or information in it may be edited, in any published version of this Act.
3 Schedules

Legislation that is specified in a Schedule to this Act is amended or repealed as set out in the applicable items in the Schedule concerned, and any other item in a Schedule to this Act has effect according to its terms.
Amendments

Income Tax Rates Act 1986

 1 Subsection 3(1)

Insert:

working holiday maker has the meaning given by subsection 3A(1).

working holiday taxable income has the meaning given by subsections 3A(2) and (3).

 2 After section 3

Insert:

 3A Working holiday makers and working holiday taxable income 1

(1) An individual is a working holiday maker at a particular time if the individual holds at that time:

 a

a Subclass 417 (Working Holiday) visa; or

 b

a Subclass 462 (Work and Holiday) visa; or

 c

a bridging visa permitting the individual to work in Australia if:

 i

(i) the bridging visa was granted under the Migration Act 1958 in relation to an application for a visa of a kind described in paragraph (a) or (b); and

 ii

the Minister administering that Act is still to make a decision in relation to the application; and

 iii

the most recent visa, other than a bridging visa, granted under that Act to the individual was a visa of a kind described in paragraph (a) or (b).

 2

(2) An individual’s working holiday taxable income for a year of income is the individual’s assessable income for the year of income derived:

 a

from sources in Australia; and

 b

while the individual is a working holiday maker;

less so much of any amount the individual can deduct for the year of income as relates to that assessable income.

 3

(3) However, the individual’s working holiday taxable income does not include any superannuation remainder, or employment termination remainder, of the individual’s taxable income for the year of income.

 3 Clause 1 of Part I of Schedule 7

Omit “and 3”, substitute “, 3 and 4”.

 4 At the end of Part I of Schedule 7

Add:

4. If the resident taxpayer is a working holiday maker at any time during the year of income:

Note: The rates for the taxpayer’s working holiday taxable income for the year of income are set out in Part III.

 a

count the taxpayer’s working holiday taxable income for the year of income as the first parts (starting from $0) of the taxpayer’s ordinary taxable income for the purposes of the table in clause 1; and

 b

do not apply the rates in that table to that working holiday taxable income; and

 c

do not count that working holiday taxable income when working out the taxpayer’s taxable income for the purposes of clause 2 or 3.

 5 Clause 1 of Part II of Schedule 7

Omit “and 3”, substitute “, 3 and 4”.

 6 At the end of Part II of Schedule 7

Add:

4. If the non-resident taxpayer is a working holiday maker at any time during the year of income:

Note: The rates for the taxpayer’s working holiday taxable income for the year of income are set out in Part III.

Example: Rosie earns a $60,000 salary while a working holiday maker from 1 July 2017 to 31 March 2018. She also earns $29,000 while holding a different class of visa from 1 April 2018 to 30 June 2018.

The $60,000 salary is Rosie’s working holiday taxable income and is the first part of her ordinary taxable income. Under Part III, she pays tax at the rate of 15% on $37,000 of that salary, and tax at the rate of 32.5% on the remaining $23,000 of that salary.

The $29,000 income makes up the remaining parts of Rosie’s ordinary taxable income. Under clause 1 of this Part, she pays tax at the rate of 32.5% on $27,000 of that income, and tax at the rate of 37% on the remaining $2,000 of that income.

 a

count the taxpayer’s working holiday taxable income for the year of income as the first parts (starting from $0) of the taxpayer’s ordinary taxable income for the purposes of the table in clause 1; and

 b

do not apply the rates in that table to that working holiday taxable income; and

 c

do not count that working holiday taxable income when working out the taxpayer’s taxable income for the purposes of clause 2 or 3.

 7 At the end of Schedule 7

Add:

1. The rates of tax on a taxpayer’s working holiday taxable income for a year of income are as set out in the following table.

 8 Application of amendments

The amendments made by this Schedule apply in relation to:

[Minister’s second reading speech made in—

House of Representatives on 28 November 2016

Senate on 30 November 2016]

(204/16)

 a

assessable income derived on or after 1 January 2017; and

 b

so much of any amounts that can be deducted as relate to such assessable income.