Working holiday vs student tax in Australia: same job, thousands apart (FY2026-27)

Two people pour coffee at the same café, on the same $30,000 a year.

One is an international student. One is a backpacker on a working holiday visa. The student may pay about $1,070 in tax this year. The backpacker pays $4,500 — more than four times as much, on identical pay.

Nothing went wrong. They’re simply taxed under two different systems, and knowing which one you’re in — and what each system owes you back — is worth thousands. Here’s how it works for FY2026-27, verified against the ATO. (Returns being lodged now cover FY2025-26; where a figure differs, it’s flagged. General information only, not personal advice.)

1. Same job, same pay — why is the tax thousands apart?

Working holiday makers (417 or 462 visa) are taxed at their own flat schedule from the very first dollar — there is no tax-free threshold:

Taxable income (FY2026-27)	WHM rate
$0 – $45,000	15%
$45,001 – $135,000	30%
$135,001 – $190,000	37%
$190,001+	45%

International students, by contrast, are usually Australian residents for tax purposes (see question 2) and get the ordinary resident scale:

Taxable income (FY2026-27)	Resident rate
$0 – $18,200	nil
$18,201 – $45,000	15%
$45,001 – $135,000	30%
$135,001 – $190,000	37%
$190,001+	45%

That second bracket dropped from 16% to 15% on 1 July 2026, and is legislated to fall to 14% from 1 July 2027. Residents may also get the low income tax offset — up to $700 — which is why a student on $30,000 pays roughly $1,070 while the backpacker on the same wage pays $4,500. The backpacker isn’t being punished for anything; the 15% simply starts at dollar one, with no threshold and no offset.

One quiet consolation for the backpacker: working holiday makers are usually non-residents, so the 2% Medicare levy generally doesn’t apply to them at all.

2. Students: you probably get the $18,200 tax-free threshold

If you’re an overseas student enrolled in a course that runs more than six months — which covers almost every degree, diploma and VET program — the ATO generally treats you as an Australian resident for tax purposes. Your visa isn’t what decides it; your settled study life is.

Being a resident means:

The first $18,200 each year is tax-free. Claim it by ticking “yes” to the tax-free threshold question on the TFN declaration when you start a job (tick it with one employer only, normally your main one).
The low income tax offset (up to $700) applies automatically when you lodge. Between the threshold and the offset, a student may earn up to about $22,800 in FY2026-27 before any income tax is payable.
The flip side: residents declare worldwide income — bank interest back home included.

If your course is shorter than six months and you’re leaving afterwards, you’re likely a non-resident and taxed at 30% from the first dollar — a genuinely different situation, worth checking before you rely on the threshold.

3. Why is 30% (or 45%) coming out of my pay?

The single most common shock on a working holiday payslip: withholding at 30% or more instead of 15%. Three usual causes:

Your employer isn’t registered as a working-holiday-maker employer. Registered employers withhold 15% on your first $45,000. Unregistered ones are required to withhold at foreign-resident rates — 30% from the first dollar. You can ask your employer whether they’re registered before you start.
The TFN declaration went wrong. A student who forgets to claim the tax-free threshold gets taxed as if the first $18,200 were ordinary income; claiming it with two employers at once causes the opposite problem — a bill at tax time.
No TFN on file. Without a tax file number, employers must withhold 45%. Never work without one — it’s free, from the ATO, in minutes.

The good news: withholding is not your final tax. When you lodge your return, the ATO reassesses you at the rates that actually apply to you — a working holiday maker over-withheld at 30% on $30,000 has had about $9,000 taken against roughly $4,500 actually payable, so around $4,500 may come back as a refund. The trap costs you cashflow during the year, not the money forever — but only lodging gets it back.

4. Students: the 2% Medicare levy refund almost nobody claims

Most Australian residents pay a 2% Medicare levy on top of income tax. But if you’re on a temporary visa and not entitled to Medicare — which is the position of most international students, since student visa holders rely on OSHC instead — you may claim a full exemption (Category 3) for every day you weren’t entitled.

On a $60,000 income, that’s $1,200 a year back. And it isn’t automatic:

You need a Medicare Entitlement Statement (MES) from Services Australia for each year you claim — you can’t just tick the exemption box. Apply from 1 July for the year just ended; processing can take up to eight weeks, so apply before you want to lodge.
The exemption also requires that you had no dependants, or that any dependants were themselves in an exemption category or entitled to Medicare.
Passport check: citizens of Reciprocal Health Care Agreement countries (the UK, New Zealand, Ireland, Sweden and others) may be entitled to Medicare and therefore not exempt. China has no such agreement — Chinese students are typically eligible.

Missed it in past years? Prior-year returns may generally be amended once you hold an MES for those years.

5. Your super has an exit tax — 65% for backpackers, 35% for students

While you work, your employer must pay 12% of your ordinary earnings into a super fund — on top of your wages. That money is yours, but as a temporary resident you generally can’t touch it until you leave.

When you do leave permanently and your visa has ceased, you claim it back as a Departing Australia Superannuation Payment (DASP) — free, online, direct with the ATO. The sting is the exit tax:

Payments attributable to time on a working holiday visa: taxed 65%.
Other temporary residents, including students: 35% on the taxed element (45% on any untaxed element; 0% on the tax-free component).

On a $10,000 super balance, a backpacker keeps about $3,500; a student keeps about $6,500. It’s worth knowing before you leave — and worth claiming even so: unclaimed super sits idle, and after about six months funds transfer it to the ATO as unclaimed money (still claimable, but your fund’s earnings and any insurance stop). DASP sits outside your income tax return — it’s a separate online claim you can make any time after departure.

6. Lodging, refunds — and leaving mid-year

The Australian income year runs 1 July to 30 June. If you lodge your own return, the FY2025-26 return is due by 31 October 2026; a registered tax agent can lodge later if you’re on their books before that date. Lodge through myTax in your myGov account — your income statement pre-fills from your employer’s payroll reporting by late July, and refunds typically land in around two weeks.

Leaving Australia for good before 30 June? Two clean options:

Lodge early before you go (paper form, once you’ve stopped earning Australian income), or
Lodge online from overseas from July — myGov works abroad; just keep your bank account open until the refund arrives, and your TFN and myGov login safe.

Part-year residents get a pro-rated tax-free threshold rather than the full $18,200 — at least $13,464, scaling with your months of residency. And one more wrinkle: a working holiday maker whose only income was WHM wages under $45,000, correctly withheld at 15%, may not need to lodge at all — but if any of the traps in question 3 touched your pay, lodging is exactly how the over-withheld tax comes home.

The one-line takeaway: the systems are different on purpose — students get the threshold, the offset and the Medicare exemption; working holiday makers get a flat 15% and a 65% super exit tax. Know which one you’re in, and make the system you’re in pay you everything it owes.

Figures are FY2026-27 and were verified against the ATO at the time of writing; thresholds and rates may change, and your position may differ — confirm the current year’s numbers before you act. General information only, not personal advice.