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How to Apply Manual Withholding for Working Holiday Makers

This article explains how to manage a Working Holiday Maker (WHM) employee who requests a higher tax withholding rate and how to calculate the withholding amount manually each pay period.

Summary

  • If a Working Holiday Maker wishes to increase their withholding rate (for example, from 15% to 30%), the payroll process can use a manual weekly tax calculation to apply the higher withholding.

Manage a voluntary increase to withholding

  • An employee can request to voluntarily increase their withholding rate (for example, from 15% to 30%).
  • When a higher withholding is required and the standard automated rate is not being used, calculate the tax amount manually each pay period and apply that amount as the withholding.

How to calculate and apply manual weekly withholding

  1. Confirm the employee’s requested withholding percentage (for example, 30%).
  2. For each pay period, calculate the tax to withhold:
    • Tax to withhold = Gross pay for the period × Requested withholding percentage (e.g., 30%).
  3. Record and apply that calculated tax amount as the employee’s tax withholding for the pay period.
  4. Ensure pay records clearly show the gross pay and the manually calculated tax withholding for audit and reporting purposes.

Best practices

  • Confirm the employee’s request in writing before changing withholding practice.
  • Keep a clear record each pay period showing the gross pay, the applied withholding percentage, and the resulting tax amount.
  • Apply the manual calculation consistently for each pay period while the employee requests the increased withholding.

Conclusion

  • When a Working Holiday Maker requests a higher withholding rate, use a manual weekly tax calculation to determine and apply the correct withholding amount each pay period.