Xero and the new Backpackers tax

To comply with the changes, you’ll need to use the terminate process in Xero to remove the employee and then add them back. In the meantime you’ll also need to set up a withholding variation for these employees in Xero, until Xero has added the new tax tables.

Set an end date on existing employee records before first pay run of 2017

  1. Identify who your working holiday makers are.
  2. Set an end date on their existing employee record, just like you would when terminating an employee with no final pay. The end date must be 31 December 2016, and you’ll need to take down their leave balances before terminating them.
  3. Add the employee back to payroll with a start date of 1 January 2017.
  4. Click the Taxes tab and unselect the Australian Resident for Tax Purposes checkbox.
  5. Select the Has Approved Withholding Variation checkbox.
  6. Enter the Approved Withholding Variation Percentage (for example, 15.00).
  7. Click Save Only.
  8. Enter their leave balances.

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