Key information on Australian taxes for foreign nationals who are studying in Australia
Are you one of the more than 500k international individuals who travel to Australia to study each year? Do you have questions about your Australian tax requirements?
If the answer to both of the questions above is yes, you have come to the right place!
Many international students in Australia are entitled to claim a refund of tax paid during the year and, at Taxback.com, we specialise in helping foreign individuals to get their tax back.
So that’s why we’ve put together this handy guide which answers the most common questions international students have about Australian tax.
As always, if you have questions that are specific to your own tax situation, you can reach out to our Live Chat team at any time 24/7
Can international students work while in Australia?
Here’s the good news – yes, international students are entitled to work and earn some income while in Australia. Students can pursue employment opportunities both on and off campus.
However, it’s important to keep in mind that international students can only earn work part-time during the semester and full-time during breaks in the academic year.
Do I really have to pay tax on the income I earn in Australia?
There really is no escaping the taxman … not even when you are studying in Australia as a foreign individual. Exactly how much you must pay will depend on your personal circumstances such as if you are deemed a resident or non-resident for tax purposes.
So how much tax will I have to pay?
There are two separate rates of tax in Australia – one is for residents and the other is for non-residents.
Non-residents pay 32.5% tax starting from the first dollar they earn and there is no tax-free threshold available. Meanwhile, residents pay 0% on their first $18,200 and 19% from $18,200-$37,000.
What is a tax refund for international students and why was it introduced?
The purpose of tax refunds is to ensure that every taxpayer in Australia only has the correct amount of tax deducted from their income and does not pay any more tax than they need to.
With this in mind, every international student in Australia is entitled to lodge a tax return with the ATO and apply to reclaim their overpaid tax from the previous year. This is known as a tax refund.
The good news is that the majority of international students in Australia are entitled to claim a tax refund at the end of the year.
File your Australian tax return today
Do I need to lodge a tax return as an international student in Australia?
The answer to this question will very much depend on your personal circumstances.
For example, if you are enrolled in a course which lasts six months or more, you may be considered as an Australian resident for tax purposes. Australian residents for tax purposes are entitled to not lodge a tax return if they earn less than $18,200 during the tax year.
Although, if you are considered a resident and you did earn less than $18,200, any tax withheld by your employer/s throughout the tax year would be available as a refund for you once the Income tax return is processed and finalized. This is why it’s always a good idea to lodge your taxes.
However, as there is no tax-free threshold available for non-residents, if you are not considered a resident for tax purposes, you must file at the end of the tax year.
What’s the difference between residents and non-residents for tax purposes?
If you are studying for longer than 6 months, you may be considered a resident for tax purposes in Australia.
As a result:
- You must pay tax on your earnings at the same rate as other Australian residents
- You may be entitled to the benefits of the Australian tax system (such as the tax-free threshold – or at least part of it)
- You may pay tax at lower rates than non-residents
Typically, if you're a temporary resident (you have a temporary student visa), most of your foreign income will not be taxed in Australia. If this is the case, you only need to declare income you derive in Australia on your tax return (plus any income you earn from employment or services performed overseas while you are a temporary resident of Australia).
What if I am studying in Australia for less than 6 months?
If you study in Australia for less than 6 months during the tax year, it is unlikely you will be considered a resident for tax purposes. Unfortunately, this means that you will probably have to pay tax at a higher rate than Australian residents do.
Should I include my foreign income on my international student tax return?
First thing’s first, Australian residents must declare and pay tax on income they earn both inside and outside of Australia.
And while international students can be considered residents for tax purposes, most on a temporary student visa will be considered a temporary resident.
If you’re in Australia on a temporary student visa, you will only need to include Australian sourced income on your tax documents.
What happens if I don’t file a tax return when I’m supposed to?
If you do not lodge your tax return, you risk incurring fines and penalties from the ATO. You also risk missing out on your tax refund.
Why leave your hard-earned money in Australia?
File your Australian tax return today
Who can help me to determine my Australian tax residency status?
It’s important to properly determine your Australian tax residency status.
The main requirement which is taken into consideration is whether you have continuously resided in Australia for a period of 183 days (6 months).
If you have enrolled in a course that lasts for less than 6 months, and you intend to leave right after you finish, you will be considered a non-resident for tax purposes.
How to file a tax return for international students in Australia
There are two ways to file your taxes.
Your first option is to file directly with the ATO yourself. The main advantage of this option is that it’s free. However, the primary drawback is that it will be up to you alone to ensure your documents are lodged correctly.
Your second option is to file with a registered accountant – such as Taxback.com.
At Taxback.com, we have specialised in Australian tax return filing for more than 25 years.
Our Australian tax team will ensure your return is accurate – containing every tax deduction you’re entitled to – and lodged correctly with the tax office.
True, you will incur a fee when filing with Taxback.com (learn more about our fees here). But the good news is that you can claim this cost as a tax deduction on your next tax return.
What do I need to lodge a student tax return?
In order to lodge your documents and claim the tax refund for international students, you will need the below documents.
End of year summary
At the end of the year, your employer will provide you with a document which outlines the total income you earned during the year and the tax you paid.
Details relating to all of your expenses
Keep your receipts close at hand!
If you earned income through working for yourself, you’ll need to have your invoices with you when lodging your taxes. These documents will help you to properly account for your self-assessed income.
These show payments you have received by the organisations within which you have shares.
Your Tax File Number
Everyone, including international students who file an income tax return, need a TFN (Tax File Number)
Proof of Australian address
Examples include: bank statements, a lease agreement or phone or utility bills.
Such as your passport
When should international students lodge their Australian tax return?
The Australian tax year runs from 1 July to 30 June. You can file your return for the previous tax year from 1 July. The deadline to lodge your documents on time is typically 31 October each year.
What expenses can I include in my international student tax return?
International students can include a number of different expenses on a tax return.
Work-related expenses - such as your uniform, work courses, tools/equipment or car/transport.
Education expenses - if you enrolled in a course related to your main activities at work or you are required to undertake the course to improve your skills and knowledge at your workplace, it is a good idea to keep your statements, receipts or invoices as you may be able to use this as deduction on your return.
What is the easiest way to lodge my Australian tax return?
You can lodge your international student tax return online with Taxback.com.
The process is really simple and it only takes a couple of minutes to get started.
Once you complete the short form here our team will take it from there! We will prepare all of your tax paperwork correctly and ensure you claim every tax relief you’re entitled to.