Tax in Australia: Tax File Number, Tax Return and Tips
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.
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. Our partners at Taxback.com have a 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 their website to make sure you are receiving all your entitlements.
Australian Tax File Number (TFN)
You need a Tax File Number (TFN) to work in Australia.
Before looking for employment, make sure you have an Australian bank account and Tax File Number set up. A bank account can be organised through any branch Monday to Saturday. Tax File Numbers can be organised through the Australian Tax Office, a TFN is required by all employers and this will help international students to be sure they are not paying a higher tax rate.
When applying for a TFN certain documentation is required this includes a birth certificate, visa, passport, confirmation of enrollment and photo identification.
Apply for a Tax File Number
To make the process a bit easier, we have teamed up with Taxback.com, who can set up your Tax File Number for you. Check out their services here:
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.
Superannuation in Australia
You will also need to set up an account with a Superannuation provider, many employers have their own which they will prefer employees to hold an account with. If not there are many different providers to choose from. Superannuation is where a percentage of the tax you pay goes into a superannuation account, this is help until retirement or if an emergency situation arises. Once you leave Australia, you’re eligible to claim back your superannuation refund. Superannuation is a percentage of your salary put aside for the purposes of a retirement fund, but if you’re not staying in Australia until retirement, you’re entitled to claim this money back!
Tax Return Autralia: Get your Australian tax back!
Tax is probably the last thing on your mind when you’re embarking on your adventure in Australia, but you should know that while working there, you’re taxed on your earnings.
Luckily, you have the legal right to claim back the money you’ve overpaid for taxes. Tax refunds may seem complicated, but they don’t have to be! We have joined forces with Taxback.com so they will do all the hard work for you.
Forget about the headache of dealing with complicated procedures and worries whether you have done everything right. Taxback.com’s highly-qualified tax experts will file your taxes accurately and ensure that you receive the maximum legal tax refund.
All you need to do is download our taxpack and send it to us with your payment documents – that's your PAYG form or final payslip. If you’ve lost them, don’t worry, we can find replacements for you.
Then just relax while we file your Australian tax return and send the money straight to your bank account. It’s that easy!
The Australian financial year runs from the 1st July to the 30th June, so make sure you have enough time to arrange the procedures and prepare all the paperwork needed for the tax return process.
Why use Taxback.com for your Australian Tax Return?
- No upfront costs – no refund, no fee!
- FREE refund estimation - get a free refund estimation prior of submitting your application at the ATO
- Maximum refunds – average income tax refund is $2500, average super refunds are $600-$5000!
- No complicated forms – just sign our Australian tax return forms and we’ll do the rest
- Lowest fees – for standard tax returns we charge 9% + handling fee of the refund received, subject to a minimum processing fee of $99 + handling fee
- Fast refunds – receive your tax refund in just 10 days
- Find out for free what you’re owed – can’t wait to find out how big your Australia tax refund might be? Use our free online tax estimator now to find out instantly how much tax you could claim back.
- Lost documents? No problem – we know it’s easy to lose paper and payslips while you’re travelling or moving back home, so we have a dedicated lost document team to get replacements for you.
- Secure payments system – you get your money quickly, safely and in your local currency wherever you are in the world!
- 24/7 Help – we’re available 24 hours a day, 7 days a week to help you with any questions about your Australia tax return on the phone, on email, or online through our instant Live Chat.
- Track your tax online – keep up to date with the progress of your Australia tax refund 24/7 with your free online account “Tax Tracker”.
Backpacker Tax Australia
Backpacker Tax Australia
The government has finally made an official ruling on the “Backpacker Tax”, which will affect all working holiday visa holders (417 and 462) starting from January 1 2017.
From January 1, the tax rate for those on working holidays will be 19% on earnings up to A$37,000. This has been brought down from the proposed 32.5%.
Above A$37,000 ordinary marginal rates will apply, which means all earnings from A$37,001-$80,000 will be taxed at the standard 32.5% rate.
Backpackers will no longer be eligible to be classed as residents for tax purposes, no matter how long you stay in any one location. The tax on working holiday makers’ superannuation when they leave Australia will also be increased to 95%. This equates to a very low likelihood for tax returns or departing super payments.
Overall, the changes are actually pretty good, though! Here’s Why:
The government has also implemented several changes to the working holiday visas to make a working holiday more available and more affordable, including:
- eligible age limit will be increased from 30 to 35 (at some stage).
- visa application charge reduced by A$50 (now A$390).
- an employer with premises in different regions may retain a backpacker for a year, so long as the second six months is worked in a different location (currently, a backpacker can only stay six months with the same employer).
Even with these changes to how backpackers are taxed, Australia still has the highest minimum wage in the world, even when adjusted for the new tax. See for yourself (converted to Australian dollars for comparison):
Australia (casual jobs) = A$22.13 per hour ($17.92 after 19% backpacker tax)
Australia (full-time jobs) = A$17.70 per hour ($14.34 after 19% tax)
New Zealand = A$14.01 per hour ($12.54 after 10.5% tax)
Canada = A$10.45 per hour ($8.88 after 15% tax)
USA = A$9.43 per hour ($8.49 after 10% tax)
Thanks to an employment law called Casual Loading, almost all of the jobs we provide to our members have a minimum pay rate of $22.13 per hour or more (that’s $17.92 after backpacker tax!!), which equates to the highest backpacker earning potential of any working holiday country in the world! And don’t forget, we have 3 of the top 10 most liveable cities in the world too.
At this time, we do not have an official stance on how this will affect 2016/17 tax returns and eligibility for arrivals before January 1 2017, but we will publish an update as soon as the information becomes available.
Stay tuned for more details.
Paying Tax in Australia
Paying Tax in Australia
While working in Australia everyone must pay tax on their income. In nearly all cases if you are travelling in Australia and you have entered the country on a working holiday visa you will be treated as non-resident. What this means is that you will have to pay tax on all of your earnings (Australian residents do not pay tax on the first $6000 they have earned in a financial year). Also your rate of tax will be higher than an Australian resident. (Non-residents are taxed at a rate of 29% on the first $30,000 of their income and a maximum of 45% on earnings over $150,000. Residents pay 15% on what they earn between $6001 and $30,000.)
There are some exceptions to this rule. If you spend most of your time in one particular place, take out a lease on a flat or premises in your name, obtain an Australian driver’s licence; join local clubs etc. and pretty much lead a lifestyle that could be construed as that of a resident more so than that of a traveller, it may be possible for you to be classed by the Australian Taxation Office as a resident. This would mean that you may be eligible to only pay approximately 50% of the tax rate of a non-resident.
When you have to submit a tax return in Australia it would be a good idea to find a good tax accountant to see if and what tax breaks and classifications you may be eligible for.
More information on classifications and tax rates can be found on the ATO’s (Australian Taxation Office) website. Before working or looking for work you will need to obtain a Tax File Number (TFN). If you don’t do this, apart from finding it very difficult to obtain work, you would be taxed at an even higher rate which would leave you earning next to nothing.
To obtain a TFN you will need a working holiday visa and an Australian address. You can apply online at the ATO’s website. Your taxation return will need to be submitted on the 30th June (the end of the financial year) or before you leave the country to return home. As previously mentioned it is wise to enlist a tax accountant to lodge your return and they will charge roughly $AU100 to $AU150.
Claim your Australian Tax
How to claim back your tax in Australia when working in Australia?
"As a working holiday maker in Australia you will pay tax at a rate of 29% and should be entitled to claim on income tax at the end of the tax year (June 30th)" (taxback.com)
It is possible for anyone to claim tax back when working in Australia, either as a non-Australian resident or as an Australian resident. However, the rate of tax for a non-Australian resident as noted afore, is much greater than that of an Australian resident. Hence, you should expect to claim back more tax at the end of the tax year! The following information will be all you need in relation to applying for your tax back in Australia, or even if you have left the country. You can apply for tax back if you meet the following requirements:
* You are a non-Australian resident and are leaving the country
* If you are an Australian resident
* You no longer earn an income from an Australian employer
The following steps should be carried out, when you are applying for your tax back:
* You can either contact the following web addresses for your application form: www.taxback.com.au. Both agencies are set up to provide you with the necessary information required when applying for tax back.
* Both agencies mentioned above can give you an early assessment of the tax amount you are entitled to receive. Also the form you need to fill out when filing for tax back can be obtained from either agency mentioned afore, or from your local tax office, or by calling the National Distributions Service 1300 720 092.
* After collecting the necessary form, you should then proceed to acquire a basic surmise of payment from each employer you have worked for within that year. If possible, collect all relevant P45s. If it is not possible for you to obtain your P45, both agencies above will help locate it for you.
* Your TFN is needed as proof of identity that you have worked and paid tax while in Australia.
* Complete the form mentioned above and either post it or scan and email it to any of the agencies mentioned above.
* Your assessment will be processed through www.gov.au in four-six weeks, and through www.taxback.com in approximately three-six weeks, depending on the nature of your individual application.
If you have any further questions regarding applying for your tax back, the following web sites are comprehensive in answering and providing information regarding such queries- www.taxback.com and www.ato.gov.au