People from another country who have decided to go on a holiday in Australia should know about taxes. Lodging your tax return may be one of the last things on your mind. After all, you may have just arrived in Australia, and you look forward to exciting adventures, certainly not paperwork.
However, you should be aware of your responsibilities as a taxpayer, especially if you plan to work.
Working in Australia
Many holidaymakers are simply in the country to enjoy the sights. However, you probably want to earn some cash while here. Before you do, it is important that you get a Tax File Number (TFN). This number applies to all citizens, as well as non-citizens who wish to work in Australia.
It is a requirement to get a TFN for yourself. Failing to get a Tax File Number is not an entirely serious offense. However, you should be prepared to get slashed 45% off your income. With such a deduction, it makes sense to apply for a TFN.
If you require assistance in obtaining a TFN, please do not hesitate in reaching out to the tax agents at R T Accounting & Taxation Services. We will be more than happy to help you with obtaining a TFN.
What is your residency status?
Even if you stay for a long period in Australia, being a working holidaymaker regards you as a non-resident. Therefore, you will be taxed at a special rate, as mentioned above.
Those who are considered non-residents for tax purposes will only be taxed on the earnings they have received while in the country. Therefore, if you have another job overseas or in your own country, that income will not be taxed by the government.
But since you are not a resident, you cannot claim any expenses that you may have made. Residents can claim a tax refund for their travel and work-related purchases. Additionally, you are not entitled to the “living away from home” allowance, which is customarily deducted against taxable incomes for Australians.
These rules may look unprofitable for holidaymakers, but there is good news. You do not have to pay the Medicare levy because you are not an Australian resident for tax purposes. Residents must pay a two percent Medicare levy to cover certain medical costs. Your taxes will only be based on your income in the country. Also, the interest on your bank accounts will only be taxed at 10%.
In November 2019, the Full Federal Court decided that working holidaymakers who are Australian residents for tax purposes should be taxed at ordinary rates. If this situation applies to you and you are from the countries listed below, you could get a refund once the final decision has been given:
- United Kingdom
Currently, the rate remains, which is 15% for $37,000, which applies to both residents and non-residents. If you wish to get a refund from your taxes, you should provide records, including your residency status (as an Australian resident) and locations where you spent and stayed in the country. These documents can be anything from your credit card and bank statements to rental receipts. You should also provide employment and travel records, along with your visa applications.
Lodging Your Tax Return
Since the financial year ends on the last day of June, you should lodge your return after this date. Some employers may not take enough tax out of your income. If it is your case, you will have to pay the remaining amount that you still owe to the government. On the other hand, if your employer did pay more than what is required, you will get a refund.
Get in touch with the registered tax agents at R T Accounting & Taxation Services to maximize your refund and ensure that you are taxed at the rate you should be.