New arrangements, commonly known as the "backpacker tax changes" came into place from 1 January 2017 for employers of working holidaymakers. For the 2017 year, employers will need to issue two payment summaries to a working holidaymaker who is employed both up until 31 December 2016 and after 1 January 2017. This is to ensure that the working holidaymaker pays the right amounts of tax on their working holidaymaker income.
The ATO says that where an employer issues a payment summary for income earned from 1 January 2017, they need to include a code H on that payment summary. Code H indicates that it is working holidaymaker income. All employers are required to use the new code if they have employed working holidaymakers from 1 January, irrespective of whether they have registered with the ATO. If tax practitioners know that the income was derived on or after 1 January 2017 and there is no code H on the payment summary, they should ensure that a code H is placed at the appropriate place at Income 1 on the income tax return.
If employers have only provided one payment summary for income derived from both pre- and post-1 January 2017 periods, practitioners should work with them to determine the amounts to be apportioned to each period, and show the two amounts on the income tax return. The post-1 January income needs to display the code H.