Tax Returns in Australia
Tax season is quite a dreaded subject, especially when you are moving to a new country and are dealing with their tax laws for the first time. Because of this, we have gathered answers from some of the most common questions that international students in Australia have when it comes to filing a tax return.
Can I work and earn an income while I’m in Australia as an international student?
We’re often asked this question as students looking to earn a degree in Australia would like to supplement their income. The answer is yes- you can work either on or off-campus part-time during the college year and full-time between semesters.
Do I have to pay tax on the income I earn in Australia?
With the ability to work in Australia as an international student comes the obligation of paying taxes. You will have to pay tax on the income you earn while in Australia, but the good news is that the majority of international students in Australia are entitled to claim a tax refund at the end of the year. Students that work part-time in Australia pay on average 15.5% income tax on their earnings. Of course, this will depend on certain circumstances that are relevant to you, such as whether or not you are deemed a resident or non-resident for tax purposes.
Do I need to lodge a tax return as an international student in Australia?
Yes, anyone that works in Australia needs to lodge a return at the end of the financial year regardless of income earned. This obligation applies especially to international students who earned income in Australia. Many international students can be daunted by the prospect of filing a tax return but the good news is that by filing your tax return you can claim your tax refund!
Additionally, by filing a return you can also ensure that your tax affairs are in order and this will be important when applying for a future Australia visa.
International students in Australia who do not lodge a tax return risk incurring fines and penalties from the Australian Taxation Office (ATO) and will also miss out on a tax refund – which can be a lot of money. The average Australian tax refund of a Taxback.com customer claims is $2,600.
Am I an Australian resident or non-resident for tax purposes?
Knowing if you’re an Australian resident or non-resident is important as it will affect how much tax you pay.
How do you know if you are a resident or nonresident? When it comes to being a resident for tax purposes the main requirement is that you have continuously resided in Australia for a period of 183 days (6 months). If you have enrolled in a course that lasts for less than 6 months, and you intend to leave right after you finish, you will be considered non-resident for tax purposes.
What is the tax difference for residents and non-residents? Non-residents will be taxed at a higher rate than residents.
- Non-residents: Pay 15% on their first $37,000
- Residents: Pay 0% on their first $18,200, then 19% from $18,200-$37,000.
If you are studying in Australia for a duration of six months or more- you are typically regarded as an Australian resident for tax purposes. So although you may be entitled to benefits of the Australian tax system like the tax-free threshold and lower tax rates, you will still need to pay tax on your earnings just like other residents.
When do I apply for a tax refund in Australia?
You have to be in Australia for at least six months before you can claim an Australian tax refund. The Australian financial year runs from July 1 until June 30 every year and the deadline to lodge your tax return and claim your tax back is October 31. If you miss the deadline, you can get extra time to lodge your return if you lodge with a tax agent.
Here are some important dates that international students in Australia will want to keep in mind.
The Australian Taxation Office starts to process tax returns from the previous tax year.
You should receive an annual Pay As You Go payment summary from your employer on this date.
The estimated date for the issue of rebates from the previous tax year. Tax refunds are typically issued 2-3 days around this date.
Deadline for lodging your tax return for the previous tax year.
How do I lodge my tax return?
To lodge your tax return and claim your tax back you will need:
- Your payslips:
- Your final payslip from each job is the most important so keep it safe.
- Your very own Tax File Number. This is a personal reference number in the tax and superannuation systems to identify you. To avoid being emergency taxed you will need to provide this to your employer within the first 30 days. Obtaining a TFN from the ATO does not cost, but if you’re struggling with the process Taxback.com can assist you with the TFN process without a fee.
- Work-related expenses:
- Receipts for your uniform, work courses, tools/equipment or car/transport.
- Self-education expenses:
- If you enrolled in a course to support your main activities at work or are required to undertake such to improve your skills and knowledge at your workplace, it’s a good idea to keep your statements, receipts or invoices as you may be able to use this as deduction on your return.
Generally, you will want to keep important documents like payment summaries, receipts, invoices and contracts for five years. If you lose these documents consulting a tax expert like those listed below, can assist you with document retrieval.
When it comes to filing your tax returns you have two options for getting them done:
- Do it yourself: You can lodge your tax return directly with the Australian Taxation Office without a fee.
- Consult a Tax Expert: we have partnered with Taxback.com to provide expert tax advice and assistance. You can contact them directly for inquiries on fees associated with any expert assistance or advice. They will take care of all the paperwork, transfer your maximum refund straight to your bank account and keep you compliant with the ATO.
What is superannuation?
Superannuation (super) is a system for employees in Australia to gather enough funds to replace their income in retirement. Your employer is legally obliged to pay 9.5% of your basic earnings into a superannuation fund for you if you earn more than $450 a month in Australia.
You will not be eligible for super if you:
- earn less than $450 per month
- are under 18 years old and are working less than 30hrs or less each week
- are a non-resident paid for work performed outside Australia
- are a resident paid by a non-resident employer for work done outside Australia
- are employed for domestic or private work for 30hrs or less each week
An important item to note is that you can only claim your Departing Australia Superannuation Payment (superannuation refund) when you have left Australia or your visa has expired. The average superannuation refund is $1,908. Before you complete the Departing Australia Superannuation Payment form, ensure you meet the necessary conditions to apply.