Taxes for Temporary Residents
First things first, the Australian Tax Year is July 1st-June 30th.
Filling your Australian tax return as a temporary resident is not complicated unless you are a business owner or own property.
Once you have all your paperwork together it should take you less than an hour to complete online. There are a few things you need to be aware of that are done differently that in the States.
As a Temporary Visa Holder or Permanent Migrant, you can apply for your Australian Tax File Number (TFN) online once you are IN Australia. You cannot apply before arriving in the country.
You online tax file number application will be sent by the Australian Taxation Office (ATO) to the Department of Australian Immigration and Citizenship (DIAC) to verify your documentation, ie you have a valid working visa or a PR visa and you are present in the country.
You may apply for a TFN if your visa states ONE of the following:
1. You are allowed to work in Australia, Temporary Business Visas such at a 457 visa.
2. You are permanently migrating to Australia, ie you have a PR Visa.
3. Through terms stated on your visa you are able to stay in Australia indefinitely.
If you have a student visa and want to work in Australia you may have to make amend your visa to include working rights in Australia.
If you do not apply for a TFN in Australia chances are you will not get hired by an employer without it. You will also end up paying more in tax plus not be eligible for any government benefits.
To open up a bank account in Australia you will most likely be asked for your TFN. I needed to have one even though at the time I was not working and I was opening up a joint bank account with my husband who had a TFN.
Your TFN also counts towards your 100 point ID for things like your apartment application.
Even though it is an online application it still takes time. Your TFN registration must be verified by DIAC to ensure you have working rights in Australia. The process can take up to 28 days and you must have a current address listed during that time.
Due to the time it takes I would suggest applying for your TFN directly after you arrive. If it is possible, use your work address.
This is when that short term apartment rental comes in handy as it will give you a “home address” making it easier to set up your TFN and bank accounts.
Filing Your Australian Tax Return
Sometime, usually around mid-late July, you will receive your “pay as you go” statement from your employer (PAYG statement). Be careful not to toss it out! The PAYG statement is not the most official looking document. I actually tossed mine out and had to get a new one. It simply a piece of paper with your yearly earnings on it and employer’s address. It looks nothing like a W2 Form back in the States.
You don’t really have to worry about it though as all your tax info from your employer has already been given to the ATO and when, if, you use the e-tax software all the amounts should automatically be filled in once you enter your TFN. Your banking interests should also auto fill for you. If you have not given your bank account your tax fill number then it will not auto fill.
I strongly recommend giving your bank your TFN or the bank will withhold taxes at the highest rate on your interest.
It fairly easy to go through, asking you questions and guiding you the whole way through.
Of course, if your taxes are more complicated then you may want to consult a tax expert, or accountant your first year. Most temporary residents do not own business or property making tax filing much easier and faster.
You can find instructions for filing taxes in Australia and other tax information here.
Note: There is no filing jointly in Australia. Everyone has to file their own taxes at the end of each year.
Medicare Levy Exemption: Get 2.5% of your income back from overpaid tax
If you are a temporary business visa holder, such as a 457 visa, then there is a good chance you can apply for a medicare levy exemption.
Through out the year your employer automatically deducts 1.5% for Australian Medicare with an extra surcharge of 1% if you make more than $70k a year. If you are not eligible to receive medicare benefits you can claim this percentage back.
You will have to get a certification from the Medicare Levy Exemption Certification Unit showing you are not entitled to Australian Medicare benefits. If you have PR or citizenship in Australia, UK, Northern Ireland, Sweden, the Netherlands, Finland, Norway, Malta or Italy then you are not eligible for the medicare levy exemption.
The certification takes about 4 weeks.
Download, fill out then scan or copy this form (keep one for your own records).
Along with the complete form above you will need:
1. The completed form
2. a printed copy of your 457 or working holiday visa details (we just sent it an email stating our visa status)
3. certified copy of the photo page of your passport
4. certified copy of your Australian entry and exit pages in your passport
You can go to the medicare office to have them certify your copies. Be prepared to wait awhile. If they offer to send it in for you say “No, Thank You” as your copies need to be sent in with your complete form plus visa details.
When getting your copies certified be sure to bring in your passport.
* Remember to also certify your picture ID page.
Get it right the first time
We were confused the first time we applied for the Medicare Levy Exemption and ended having to do it twice, taking 8 weeks instead of 4 weeks.
You have to photocopy all of the pages in your passport showing you entered and departed Australia and then have them certified. You are not required to photocopy every page of your passport.
We have friend who travels a lot on business and ends up photocopying several pages in her passport. She has gotten into the habit of making it very clear when she entered and departed Australia on her photocopies. If you travel a lot, you might want to do the same.
Write on the photo copies descriptions of the stamps with arrows making it very clear to the Medicare Agent reviewing your photocopies. You may want to include things like “04.07.2012 arrived in Australia from New Zealand” for example. It will take longer to get the certification if they cannot easily understand your travel history.
Mailing address for Levy Exemption Certification Unit
Once you have your certified copies (including photo page), visa details, and completed Medicare Levy Exemption Form send the whole lot to:
Levy Exemption Certification Unit
Department of Human Services
GPO Box 9822
Hobart TAS 7001
No need to wait for your certificate if you are filling online
Once you’ve applied for the certificate, you can indicate that you weren’t entitled to medicare in e-tax even if you haven’t received your certification yet and you are 100% certain you qualify for the Medicare Levy Exemption.
If you have forgotten to apply for your Medicare Levy Exemption for previous years, you can still claim it back. Just follow all the steps above for the years you missed.
Good Luck. Remember do not leave this until the last minute.
Big Fat Disclaimer: I am not a tax expert or an accountant. Be sure to research and confirm all information listed above. It is your responsibility that your taxes are filled out correctly.