All you need to know about paying tax in Australia
When you’re living and working in Australia, you’ll need to meet the country’s tax obligations. If you’re over on a sponsored work permit, working while studying or on a working holiday, it’s good to know what tax you’ll be paying… and on the upside, what refunds may be due to you.
Our expert partners at Taxback.com answer the most frequently asked questions relating to Australian taxes.
Getting ready to start a job in Australia
In order to start working in Australia you must obtain a Tax File Number (TFN) or, if you are self-employed, an Australian Business Number (ABN). A TFN is like the Irish PPS number and is your personal reference number in the tax and superannuation (pension) systems in Australia. To avoid paying emergency tax when you start working, you need to provide your TFN to your employer within the first 30 days of starting work.
What is a Tax File Number?
A Tax File Number (TFN) is a nine-digit number that providers use to identify your tax status, i.e. whether you’re classed as a resident or non-resident for tax purposes.
It’s important that you are being taxed correctly, otherwise you could be overpaying tax, which nobody wants to do!
Your Australian Tax File Number (TFN) will allow you to:
- Open a bank account
- Pay the correct rate of tax
- Change jobs easily
- Apply for any applicable government benefits
- Join a superannuation fund (defined-benefit pension scheme)
- File a tax return
- Claim a tax refund
A TFN is not compulsory, however it’s advised to have one ready to go when you arrive in Australia. It will prevent you from overpaying tax and will make it easier to lodge your tax return.
If you don’t supply your employer with your personal TFN within the first 30 days of your employment, you could be subject to emergency tax, which can be up to 45%. So definitely be prepared and apply for your TFN before you arrive in Australia.
Taxback.com can help you to apply quickly and easily for your TFN, simply apply here.
What is an Australian Business Number?
An ABN is a unique 11-digit number assigned to businesses by the Australian Business Register (ABR). All self-employed taxpayers are required to have an ABN and quote it on invoices for work performed. Common examples of occupations where an ABN might be required are trades such as carpentry, fundraising, and personal training. An ABN is used for:
- Correspondence with the tax office
- Dealing with government agencies
- Transactions with other businesses
- Confirming details for ordering and invoicing with other businesses
- Claiming goods and services tax (GST) credits
- Claiming any fuel tax credits you qualify for
Why do I need one?
You will need an ABN if you plan to work as a freelancer or self-employed person in Australia. Please note that individuals who apply for an ABN should already have a personal TFN.
Tax is not taken at source for those working on an ABN. You will need to raise an invoice and then receive payment in full. So, you will need to keep a portion of that income to meet your tax liability at the end of the financial year.
You can apply for an ABN if:
- Your activity is carried out in:
- The form of a business;
- The nature of a trade;
- The form of a regular or continuous grant of a lease, licence or interest in property
- Your activity takes place in Australia or you make supplies connected with Australia; or
- You have a reasonable expectation that a profit will be made from your activity.
If you do not quote an ABN, 46% of your payment can be withheld from other companies so it’s important to have one.
Taxback.com can help you to apply quickly and easily for an ABN, simply apply here.
Is an ABN the same as a TFN?
No, an ABN and TFN are different.
A TFN is your personal number for dealings with the Australian Tax Office (ATO) and an ABN is a public number used for business dealings.
Do I need to lodge an Australian tax return?
Yes. Anyone who works in Australia is required to lodge an Australian tax return to declare their income.
It’s important that you complete your tax return so that your tax affairs are in order with the ATO. This is especially important for those who wish to apply for another Australian visa in the future.
On a more positive note, you should keep it in mind that by lodging your tax return, you will be able to claim a tax refund if you are eligible for one. After all, who wouldn’t want some extra cash in their pockets?
When should I file my Australian tax return?
The Australian tax year runs from 1 July to 30 June every year and the deadline for filing your tax return is 31 October. So, in essence, you should file your Australian tax return between 1 July and 31 October each year.
What do I need to file my tax return?
When lodging your tax return, you will need the following:
- Your payslips – the final one you receive from your employer is the most important, so keep that safe!
- Receipts for work-related expenses – if you had any work-related expenses for tools, equipment, a uniform or a work-related course, you can claim tax relief on those so it’s important to keep your receipts safe
- Your Tax File Number (TFN)
How can I file my tax return?
You can file your tax return yourself with the ATO. However, if you opt to file your return yourself, you will need to do some research about how to fill in the tax paperwork correctly and which tax deductions you are entitled to etc.
To ensure you get the maximum benefit from the tax system, it’s a good idea to file your return with a tax agent such as Taxback.com. They are the global tax specialists and have more than 20 years’ experience helping people file their tax returns. A team of tax experts will help you file your Australian tax return and claim your maximum tax refund. Simply fill out this short form to apply with Taxback.com.
What is superannuation?
Superannuation is a system that allows employees in Australia to save a portion of their income for retirement. It is often more commonly referred to as ‘super’.
Your employer contributes 10% of your wages to a super pension on your behalf. All employers are required to do this for workers above the age of 18 and if they are earning more than $450 a month.
The good news for students or working holiday visa holders in Australia is that you can claim a Departing Australia Superannuation Payment (DASP) once you have have left Australia and your visa has expired.
Taxback.com can help you to claim back your superannuation. What’s more, if you have already left Australia, but your visa has not yet expired, the team at Taxback.com can arrange to have your visa cancelled so that you can claim your superannuation back, straight away.
Click to Claim your superannuation back with Taxback.com.
If you have any questions about your Australian tax requirements, the Live Chat team at Taxback.com are online 24/7 to answer your questions, so feel free to get in touch with them to clear up any tax queries you might have!