Reckon Accounts Business Range and the new Backpackers Tax


How do I create a tax scale for the recently introduced “Backpacker Tax”?

Set the Employee Tax Details to Tax Code 8-No TaxC and the Tax% field to 15%.

The Issue

In December 2016 the Australian Government finalised the re-categorisation of foreign visitors on working holiday visas (“backpackers”) for PAYG withholding purposes, from parity with “Residents” (Tax Code 2-TFT) to a special category of “Non Residents” (Tax Codes 3NonRes and 8-No TaxC).

From 1 January 2017 visitors on working holiday visas will be subject to the following PAYGW scales for annual incomes of:

·         $1 – $37,000 – 15% (“backpacker tax”)

·         $37,001 +     –  32.5% (normal Non-Resident tax)

Non-Residents who do not possess a “working holiday visa” are subject to the Non-Resident tax rate for all income.

Please note that these levels are subject to change and users should consult with their Accountants on prevailing definitions of non-resident, working holiday visa, rates and thresholds. 

Reckon Accounts does not have a specialised backpacker tax code.


Tax settings are configured in the Employee Record: 

1.    Employee Centre > right click Employee > Edit employee

2.    Change tabs to Payroll and Compensation Info

3.    Taxes button

Where employee is earning a total of less than $37,000 per annum:

1.    For the Tax field, select 8-No TaxC

2.    In the Tax% field, enter 15%

3.    Click OK

If a worker is to earn more than $37,000, the tax on additional income will be higher – 32.5%.

You can handle this change by using the Tax Rebate field, however you will need to calculate the correct amount according to your pay frequency.

At 15%, $5,550.00 tax is paid on $37,000:

·         On a Weekly pay basis this equates to $106.73

·         On a Fortnightly pay basis this equates to $213.46

·         On a Monthly pay basis this equates to $462.50

Please check with your Accountant for the correct equivalents for your pay cycle and circumstances.

Tax settings can now be configured as: 

1.    For the Tax field, select 3-NonRes

2.    For the Tax Rebate field enter the pay cycle equivalent of $5,550.00:

a.    eg: for weekly pays, enter 106.73

Ensure you terminate the employee at 31st December 2016 and create a new employee from the 1st of January 2017 with the new tax scale.

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