If you worked in any of these countries, you could be due a Tax Refund

The Oz Tax System

With Australia being among one of the most popular destinations for gap years and working holidays we thought that it might be useful to compile a guide on how the Australian tax system works. In many cases the Oz tax system is quite different to how tax works in the countries where the working holidaymakers come from so we’ve put together answers to the questions we get asked most.

What is the tax year in Australia?

The tax year in Australia runs from 1st July to 30th June (for example the 2015 tax year runs from 1st July 2014 to 30th June 2015).

What is the rate of tax in Australia?

Individual tax rates in Australia for temporary visa holders in particular are dependent on the duration of time that you spend in the country and indeed your intentions while there.

For temporary visa holders such as working holidaymakers (on the 417 visa), those on a work and holiday visa (462) and students there are two tax types that need to be taken into consideration non-resident tax rates and resident tax rates.

Non-resident tax

All temporary visa holders entering Australia should pay the non-resident rate of tax for their first 6 months in Australia to ensure that they will not encounter any issues when they are departing Australia. Non-resident rates are higher than the resident rates of tax but if you don’t pay these for at least the first 6 months you are likely to run into a situation at the end of the year when you will have an underpayment of tax and will need to make a payment to the ATO (Australian Tax Office).

The non-resident rates are as per the table below:

Taxable income

Tax on this income

0 – $80,000

32.5c for each $1

$80,001 – $180,000

$26,000 plus 37c for each $1 over $80,000

$180,001 and over

$63,000 plus 45c for each $1 over $180,000

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Resident tax

As the name suggests, this is the rate that residents of Australia pay on their income. Temporary visa holders generally are deemed ‘Australian residents for tax purposes’ once they have spent 183 days in Australia and are then entitled to pay these rates.*

The resident rates of tax are as per the below:

Taxable income

Tax on this income

0 – $18,200

Nil

$18,201 – $37,000

19c for each $1 over $18,200

$37,001 – $80,000

$3,572 plus 32.5c for each $1 over $37,000

$80,001 – $180,000

$17,547 plus 37c for each $1 over $80,000

$180,001 and over

$54,547 plus 45c for each $1 over $180,000

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*There are numerous other requirements but this is the main qualification requirement – if you are unsure if you qualify for the resident tax rate, it is worth speaking to the ATO or Taxback.com

The average tax refund Down Under is AU$2600

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Is there a tax free allowance in Australia?

Yes. The tax free allowance in Australia is $18,200 and in order to be entitled to this you need to be deemed a resident for tax purposes.

What this means in a nutshell is that if you spend more than 183 days in Australia you will be able to earn $18,200 tax free J.

When can I apply for my tax back?

To apply for your tax back, you need to file a tax return. Get FREE estimation with our Australian tax refund calculator. You can file your tax return either at the end of the tax year or when you are permanently departing Australia and don’t intend to work again in the current tax year.

The latter is referred to as an Early Assessment and this means that temporary visa holders that are heading home or indeed continuing to travel to a new destination and departing Australia before 30th June can file for their refund early. This process is done via a paper application and takes 6-8 weeks to be processed.

End of year applications are electronic and take 10-12 business days to be processed.

Are there filing deadlines in Australia?

Yes. Taxpayers in Australia have from 1st July to 31st October to lodge their income tax return/refund application.

After October 31st if you have not filed you will need to engage the services of a tax agent as individual tax return filing closes. This is something that Taxback.com can assist with.

What is needed to file a tax return/refund?

The main requirement here is that you will need to be able to provide details of all your income during the year. This means that you need to keep records of all the jobs you have had and be able to detail the income from each.

At the end of the tax year, each of your employers should issue you with a PAYG (pay as you go) summary and this will detail all this information but we would recommend keeping all payslips also as sometimes when travelling PAYGs get sent to the incorrect addresses etc.

Another source of income that needs to be included on your return/refund application regardless of how small it is – is bank interest. Most accounts will accumulate bank interest and you need to detail this on the return to avoid any discrepancies that will lead to your file being reviewed and delayed. In order to find out what needs to be included you should ask your bank for an interest statement which will outline it all.

What can be included in application to minimise tax liability/increase refund?

The only way that a taxpayer can minimise tax liability or increase the value of his / her refund is to include work-related expenses.

Work related expenses vary from person to person as they are specific to your core occupation – so for example if you are bricklayer you will be able to include expenses for courses relating to that occupation or protective gear such as steel toe boots etc. but you would not be able to claim for something such as a laptop unless you were able to prove that it was required for you to carry out your job.

Travel is an expense that always comes up when taking about work-related expenses, but it only qualifies in cases where you have been asked by your employer to travel and such travel was not reimbursed. You cannot include your travel to and from work in your tax return as this is a cost of living as opposed to a work related cost.

Taxback.com top tax tip:

If you are reading this and you are planning your trip to Australia or have recently arrived it is worth planning to be in Australia for 183 days (or more) as this will allow you, subject to other criteria, to qualify for an income tax refund and boost your travel budget to see more of this great country or perhaps another country J

If you are looking for information on superannuation please check out our article Superannuation FAQ  

The above covers the main items relating to the Oz tax system but if anyone has any specific questions they would like answered then please feel free to register here for a call back or indeed comment below and we will get in touch.

About The Author

Eileen Devereux - Commercial Director @ Taxback.com

I love all aspects of my job. I particularly enjoy working in an environment where I am given the freedom to explore new ways of doing things!

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