Are you ready for the backpacker tax?

The 'backpacker tax' has caused some controversy in Australia, with businesses slamming the levy when then-Treasurer Joe Hockey first proposed the idea in the 2015 Budget.

Under the original plan, working holidaymakers were forced to pay 32.5 per cent of every dollar they earned without enjoying the usual $18,200 income tax-free threshold.

However, the move was unpopular among organisations, particularly those in the tourism and agriculture industries, as they believed the legislation would make travellers hesitant to visit Australia.

The Australian government has since revised the tax down to 15 per cent on an employee's first $37,000, and introduced the levy from 1 January 2017.

Organisations that employ backpackers now have until 31 January to register with the Australian Taxation Office (ATO). But does this affect you?

Who needs to register?

The backpacker tax applies to any individual who is employed in Australia and possesses a 417 or 462 working holiday visa.

Businesses must check their employees have the right visa before registering with the ATO and withholding 15 per cent of workers' salaries. Employers that fail to register will still need to withhold tax, but at standard foreign resident rates, which is 32.5 per cent on every dollar for salaries up to $87,000.

ATO Assistant Commissioner Michael Gleeson confirmed the registration deadline only applies to companies that already employ backpackers. If organisations intend to take on working holidaymakers in the future but don't currently hire any, they can register at a later date.

"Knowing which employers have registered and are doing the right thing ensures we can focus our activities on working with employers of backpackers who are not withholding at the correct rate," said Mr Gleeson.

"We have already had about 7,350 registrations. We are seeing a steady stream of about 400 employers registering a day."

How do I register?

If you are unclear regarding any of the issues surrounding the backpacker tax, contact a qualified accountant who can take you through the details and gauge whether or not the levy applies to your workforce.

You can check employees' visa status using the Visa Entitlement Verification Online service on the Department of Immigration and Border Protection's website or ask personnel to provide the necessary details directly.

The registration process is completed online and takes approximately five minutes.

Please get in touch with WMC Accounting if you would like more information on the backpacker tax or other tax, auditing and business services.