Backpacker for part of the financial year

Rosie

Hi there,

I am looking into the setup for a Working Holiday Maker in Reckon. I came across the following post:

https://help.reckon.com/article/o7du195a39-kba-5510-backpacker-tax-rate-in-rab

Is this still the way reckon recommends dealing with both the tax rate for a backpacker / Working Holiday Maker and also how to deal with them changing to an Australian Resident part way through the year? ie. terminating and creating a new employee card?

Thanks, Rosie

Acctd4

Hi Rosie

This guide was created to deal with the legislation change for WHM when it occurred back in 2017, pre-STP.

Personally, I would not be creating a new Employee record in your situation (in order to retain the existing Employee Number) Instead I would update the existing record now to the Australian Resident applicable tax code & utilise the Notes section to add date-stamped notes on it.

Rosie

Hi Shaz,

Thankyou for your reply. Last year I had been told by the ATO that I needed to submit two payment Summaries for the employee so that the portion of wages earned whilst they were a Working Holiday Maker was shown differently on the payment summary to the wages earned when they were deemed an Australian Resident for tax purposes. Is that no longer the case due to STP? If so, that's fantastic!

Also, in regards to WHM's, do you know of any work around to manually entering the tax rate, monitoring their earnings, and then increasing the rate once they hit 45%?

Thanks for your help,

Rosie

Acctd4

Actually, it's just dawned on me ... the Income Statement (aka Payment Summary) has to be allocated a specific income code for WHM ("H") that needs to be included in the employee's tax return. So - whilst I'm not a fan of the effect in the payroll records - you will need to set up a separate employee record if the WHM's status has changed to Aus Resident after all! 😒

Unfortunately, there's not currently a workaround to automate the WHM rate increase once the earnings threshold is reached. I'd recommend using a (Modified) Payroll Summary report set to This Financial Year to Date to routinely check. If you have more than one WHM, you could modify this report to include all of them & set it to Display Columns by Employee, then Memorise it & generate it after each pay run to keep check.