This is a sponsored guest post, even so I think it is very relative to moving to Australia as it about something we all need to know about, Australian Taxes.
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So you’re moving to Australia, or perhaps you’re fresh off the plane!
Either way, you’re probably more concerned with getting a job or sorting out a place to live than hearing about tax, but it’s helpful to get the lowdown on tax in Australia as it can be very fruitful to know how the system works.
Let’s look at the tax system first.
Australian Income Tax:
So let’s cover the basics. Firstly, the tax year in Australia runs from 1st July to 30th June. All income earners in Australia are obliged to file an annual income tax return to the ATO (Australian Tax Office) and this extends to temporary visa holders such as working holiday makers and 457 sponsorship. Your tax return needs to be submitted by the 31st October each year as you can incur penalties for late filing.
When you work in Australia, you’ll need to supply your employer with your Tax File Number (TFN). Your employer will deduct tax at source on your income and pass it to the ATO under the Pay as you go (PAYG) system. The rate of tax you pay depends on how you complete your tax file declaration form at the start of your employment. Question 8 on this form will ask ‘Are you an Australian resident for tax purposes?’ and how you answer this question will determine the rate of tax you pay.
How much tax will I pay?
As per the tax tables below, Australian residents pay lower tax than non-residents. To be deemed an Australian resident for tax purposes there are a number of requirements, the main one is that you’ve resided in Australia for a minimum of 183 days – it’s for this reason that it’s advisable for all temporary visa holders to tick ‘no’ to question 8 on this form for at least the first 6 months in Oz.
Resident rates of tax:
As you can see in the resident tax table, there is a nil tax liability for residents up to AUD $18,200 – this is because in Australia, residents for tax purpose qualify for a tax-free threshold of AUD $18,200.
Work related expenses
Another valuable piece of information is the entitlement to file for deductions for work related expenses. Work related expenses (as per the ATO definition) are any expenses incurred in performing your role or directly as a result of your occupation. These include items such as work related courses, equipment such as laptops, and utility bills where a portion of such utilities are used for work, etc. It’s very important to keep records, such as receipts and documents to include in your annual return to minimise liabilities and maximise any refund.
This might sound daunting, but most temporary workers in Australia tend to be due refunds at the end of the tax year, when all factors are taken into consideration.
Am I owed a refund?
The average refund seen by Taxback.com for an Australian income tax return is AUD $2,600. If you’ve been working in Australia and wondering if you’re owed a refund, why not submit your details here and a member of the friendly team in Taxback.com will give you a call.
Superannuation or ‘Super’:
Superannuation or ‘Super’ for short is the Australian pension/retirement contribution. This is something that’s payable for ALL employees regardless of nationality – so if you’re on a temporary visa in Australia you’ll be entitled to this.
Superannuation is paid by your employer to a nominated super fund. When you arrive, you may not have a fund or know where to set one up. You can pop into your bank and ask them to set one up or ask you employer to use their default fund for you. Remember to make sure you keep the one fund if/when you move to a new company.
Superannuation is paid at a rate of 9.5% of your gross income, so when you’re applying for jobs remember that super is generally in addition to your salary. This 9.5% is typically paid quarterly by employers (others will pay more frequently), so don’t be alarmed if your balance is not changing with each pay cycle.
Super is only obligatory once you’re earning more than AUD $450 per month – if you’re earning less per month then you will not be entitled to super.
Getting a Super refund
So in a nutshell, this money is to prepare for retirement in Australia – what does this mean for temporary visa holders? If you’re a temporary visa holder and have worked in Australia and accumulated super and you’re leaving or have left, then you’re entitled to file for this money now.
That’s the good news – the bad news is you’ll be taxed for taking the money out of your super early, at a rate of 38% of its value. This might sound like a lot, but if you don’t claim it you’ll be losing value in insurance fees and administration costs.
Disclosure of Material Connection: This is a “sponsored post.” The company who sponsored it compensated me via a cash payment, gift, or something else of value. Regardless, I only recommend products or services I use personally and believe will be good for my readers. I am disclosing this in accordance with the Federal Trade Commission’s 16 CFR, Part 255: “Guides Concerning the Use of Endorsements and Testimonials in Advertising.”