Australia Tax

Income Tax

They say the only two things that are certain in life are death and taxes.  The latter certainly holds true in this situation.  Fortunately, the Australian tax system is relatively easy to follow and in most cases you can deal with the Australian Taxation Office through their website.  This includes lodging tax returns and applying for a Tax File Number.  The ATO website also provides information and advice on all tax related matters.

Australian employers and employees use the Pay As You Go (PAYG) system.  This means that your employer will withhold your tax from your regular earnings on your behalf.  At the end of the financial year (June 30), you will have to lodge a tax return.  The outcome may see you receiving a refund for excess tax you have paid throughout the year, or having to pay more.  

Some people choose to voluntarily pay more tax to ensure they are not left with a bill at the end of the financial year.  The ATO website has a simple but comprehensive tax calculator you can use to ensure you are paying the right amount.  Depending on your situation, you may also be entitled to benefits and tax breaks.  It is a good idea to have a thorough look through the ATO website to make sure you are receiving all your entitlements.

Superannuation

Superannuation is an Australian retirement scheme whereby employers are required to make contributions to their employee’s superannuation or retirement fund.  Employee’s who earn more than $450 per calendar month are legally entitled to superannuation. 

Australian’s are unable to access that money until they retire but international employees who have accrued superannuation may be entitled to withdraw these funds when they leave the country.  This is called the Departing Australia Superannuation Payment.  You can apply for your DASP online at the Australian Taxation Office website.

Tax File Number

An Australian Tax File Number (TFN) is an essential requirement for gaining employment in the country.  Your employer will use your TFN to ensure that you are being charged the correct amount of tax.  Without a TFN, you may also be denied benefits to which you would otherwise be entitled.  Additionally, if you hold an Australian interest account, you will need to declare your TFN to prevent being charged tax on the interest you earn.

A TFN is an important identification tool, similar to an American Social Security number.  You may need to use your TFN when dealing with the Australian Taxation Office or other government bodies.  In some cases, banks require a TFN when you open an account.  Your TFN will prevent you paying any unnecessary tax and can also protect you against identity theft.  

You may apply for a TFN if you have a working visa, permanent migration visa, valid overseas student visa or valid visa to live in Australia.  There is no fee involved.  The benefits of obtaining a TFN are far reaching so even if you are not planning on working it is still a good idea to have one.  You can do so by visiting the ATO website, or by calling 13 28 61 between 8.00am and 6.00pm Monday to Friday.

Tax Returns

Anyone who earns an income in Australia is liable to pay income tax.  You will have to lodge a tax return if you:

• are a resident for taxation purposes,
• had tax withheld from your income, or had tax withheld on interest because you did not declare your Tax File Number, and
• had a taxable income of more than $6000.

Generally, international students on a working visa for more than six months are considered residents for tax purposes.

You can lodge your tax return online at the Australian Taxation Office (ATO) website, or by obtaining a free tax pack at Australian Post offices.  You can also pay a chartered accountant to lodge your return for you.  If you do hire an accountant, you may claim their fee on your next tax return.

If you are leaving Australia permanently before the end of the financial year (June 30), you will have to lodge an early tax return.  You can do this by completing a Taxpayer leaving Australia – Request for early assessment form with the ATO.  You should contact the Tax Office to make arrangements for any debts or returns.

If you are outside Australia, you can fill out the ¬E-tax form on the ATO website or lodge a return with the Australian embassy in your country.  Alternately, you can ask a friend or relative in Australia to lodge your form for you, but you will need to complete a Power of Attorney form that allows your designate individual to act on your behalf.