The 45% backpacker tax — and how to claim your refund

Tax is where working holiday makers quietly lose the most money — first to over-withholding, then by never claiming a refund. The good news: most of it is avoidable, and a lot of it is refundable.

Why you might be taxed 45%

If you start work without giving your employer a tax file number (TFN), they're legally required to withhold tax at the top marginal rate — 45% — on everything you earn. Apply for your TFN as soon as you arrive (it's free) and give it to your employer to be taxed correctly.

With a TFN, working holiday makers are taxed at 15% on the first $45,000 of earnings, which is far lower than 45%.

How to get a tax file number (TFN)

• Apply free online through the Australian Taxation Office (ATO) once you're in Australia
• You'll need your passport and visa details
• It usually arrives within about two weeks
• Give it to every employer so you're taxed at the working-holiday rate, not 45%

Claiming your tax refund when you leave

At the end of the financial year (or when you leave Australia for good), you lodge a tax return. If too much was withheld — very common if you started a job before your TFN came through — you get the difference back. The average backpacker refund is around $2,600.

Keep every payslip and your income statement. You'll need them to lodge accurately and to prove what you earned and what was withheld.

Don't confuse tax with superannuation

Your tax refund and your superannuation (retirement savings your employer pays on top of wages) are two separate pots of money. You claim super back separately when you leave — see our DASP guide.

How Tern helps

Tern prompts your TFN application at signup, stores your payslips in one place so lodging a return is painless, and flags if your employer is withholding the wrong rate — so you keep more of what you earn and reclaim what's yours.