Tax withheld is the income tax your employer sends to the ATO out of your gross pay before the rest reaches your account. On a working holiday visa it should be about 15% of gross earnings up to $45,000.
What are the three numbers on a payslip and how do they relate?
Every compliant Australian payslip shows gross pay, tax withheld and net pay: the first minus the second equals the third. Gross is what you earned, tax withheld is what your employer forwarded to the ATO, net is what lands in your account.
Tax withheld is a prepayment, not a final bill. It is an estimate collected pay by pay against a liability calculated once, at the end of the financial year, across your whole income. Over-withholding produces a refund; under-withholding produces a bill.
How do you check the rate is right?
Divide tax withheld by gross pay on any single payslip. A working holiday maker with a Tax File Number Declaration correctly completed and a properly registered employer should land near 0.15.
- Gross $600 a week: about $90 withheld
- Gross $900 a week: about $135 withheld
- Gross $1,200 a week: about $180 withheld
- Gross $2,000 a week: about $300 withheld
Do it on more than one payslip, and on each employer separately. The common pattern is not a payslip that is wrong across the board, it is one employer correct and another quietly wrong for months.
What does each wrong percentage mean?
The percentage tells you which rule went wrong, and each one has a different cause and a different fix.
Around 45%. Your Tax File Number Declaration has not reached payroll, or the 28 day window lapsed without your TFN. The most expensive and the most common. It resolves the moment the declaration is on file, from the next pay run onward.
Around 30% or a bit above. Your employer is not registered with the ATO as an employer of working holiday makers, so they are applying foreign resident rates. This is not your mistake and there is nothing on your declaration form to fix. The excess comes back at tax time.
Noticeably under 15%, or close to nothing on ordinary wages. The tax free threshold was claimed on your declaration. It is the only one on this list that creates a debt rather than a refund, because too little was withheld all year and the shortfall is payable at assessment.
Nothing at all, with no super line either. You are being paid outside payroll, whatever anyone called it. There is no withholding to reclaim and no income statement to lodge from, and the income is still declarable.
Where does the money go once it is withheld?
Your employer holds it briefly and remits it to the ATO on their own reporting cycle, then finalises the totals at year end as your income statement. That statement is what your return is built from, not your payslips.
If an employer never finalises, or finalises with figures that do not match what you were paid, your payslips are the only evidence of the difference. That is the whole argument for keeping them.
Why keep payslips if the ATO already has the data?
Because the ATO has what the employer reported, which is not always what you were paid. Payslips are how a discrepancy gets resolved, and they are the only record that shows super separately from tax, the line most likely to be missing entirely.
Payroll errors on backpacker wages are not rare and not usually malicious. They cluster in small single site operators, in farms and packing sheds using casual paper systems through a harvest, and in venues where one person does payroll around everything else. Keeping the emailed payslips in one folder settles the question later.
Why does your payslip read differently?
The 15% benchmark applies to every working holiday maker, so a payslip that reads differently is telling you something about your own setup. These situations produce a different percentage, and they do not all point the same way.
- How many employers you had. Each is a separate declaration, a separate rate and a separate income statement, and over-withholding is usually concentrated in one of them.
- Whether any employer was unregistered as a working holiday maker employer, which produces foreign resident withholding you cannot fix on your end.
- Whether the tax free threshold was ticked. This is the branch that produces a bill rather than a refund.
- Whether any of your income was ABN work, where nothing is withheld at all and the tax is settled entirely at assessment.
- Whether a period ran before your TFN was on file, which puts a block of pays at 45% and concentrates your refund there.
Anything withheld above what you actually owed comes back through your working holiday tax return, and you can estimate your tax refund from your year to date figures.