Tax Residency

The ATO needs to know whether an employee is an Australian Resident, Foreign Resident or Working Holiday Maker for taxation purposes.

Please check with the ATO for current information.

According to the ATO Website

The easiest way to work out your tax residency is with the ATO calculators:

• Determine your residency status – coming to Australia
• Determine your residency status – leaving Australia

The primary test of tax residency is called the 'resides test'. If you reside in Australia, you are considered an Australian resident for tax purposes and don't need to apply any of the other residency tests.

If you don't satisfy the resides test, you'll still be considered an Australian resident if you satisfy one of three statutory tests:

• The domicile test: You're an Australian resident if your domicile (broadly, the place that is your permanent home) is in Australia, unless we are satisfied that your permanent place of abode is outside Australia.
• The 183-day test: If you're actually present in Australia for more than half the income year, whether continuously or with breaks, you may be said to have a constructive residence in Australia, unless it can be established that your usual place of abode is outside Australia and you have no intention of taking up residence here.
• The superannuation test: This test ensures that Australian government employees working at Australian posts overseas are treated as Australian residents.

Where is it specified in Marlin HR?

On the General tab in Employee Maintenance you will need to make certain selections regarding an employee's residency for taxation purposes in Australia.

For Taxation Purposes: in this field you must select Australian Resident, Foreign Resident or Working Holiday Maker according to what the employee entered on the TFN Declaration form they provided to you upon commencement. Note that if Foreign Resident or Working Holiday Maker is selected, the Home Country must be that shown on the employee's visa and cannot be Australia.

Tax Scale: This is the tax scale that will be applied to the employee's earnings. The selection must be appropriate to the value selected in For Taxation Purposes field:

• Foreign Resident: You must select: Foreign Residents or Foreign Resident - No TFN or Foreign Resident + STSL Debt
• Working Holiday Maker: You must select: Working Holiday Maker - No TFN or Working Holiday Maker 0 - 45,000 or Working Holiday Maker 45,001 to 120,000

Tax Category: The selection here will also depend upon the selection in the For Taxation Purposes field:

• Working Holiday Maker: You must select Working Holiday Maker (regardless of whether a TFN has been provided)
• If the employee is either an Australian Resident or Foreign Resident and has not provided a TFN within 28 days of commencing work, You must select No TFN.

Please click on Hint beside each field for further information.

What is it used for in Marlin HR?

The information regarding an employee's residency is reported to the ATO via STP (Single Touch Payroll reporting) and enables them to cross-check that you are applying the correct tax scales to the employee.

Working Holiday Makers

The ATO defines Working Holiday Makers as individuals – including backpackers – who are working in Australia and holds at that time:

• Working holiday makers visa (subclass 417), or
• Work and holiday makers visa (subclass 462), or
• Bridging visa permitting the individual to work in Australia if:
• 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
• the Minister administering that Act is still to make a decision in relation to the application; and
• 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).

Employer Registration with ATO

Employers of Working Holiday Makers are required to perform a one-off registration with the ATO.

https://www.ato.gov.au/business/your-workers/employers-of-working-holiday-makers/