Working abroad in Australia: things you need to know
Are you planning to work while you are staying in Australia? If the answer is yes, firstly you need to check whether you are eligible or not and what are the necessary requirements to get a job; secondly, you need to check what to do when it comes to filling a tax return application.
To be eligible to work in Australia you need in the first place an Australian visa that allows you to work: Tourist and Travel Visa, just to give you an example, do not allow work rights. If you hold a Temporary Visa, such as the Working Holiday Visa (WHV), Student Visa or a Permanent Visa, like the Skilled Visa, you can get a job in Australia, but conditions are applied. Once you are certain you have the rights to work in Australia, the next step to take is to apply for a Tax File Number, required for doing things like lodging your tax return electronically or applying for an Australian Business Number (ABN), necessary if you want to work as a sole trader. Both your TFN and/or ABN are unique reference number which is lodged in the Australian Taxation Office (ATO). You can apply through the ATO for both in either way: online, through the ATO website, or in person, going directly to the ATO offices or to the Post Office. You can apply for those once you have obtained your visa with working rights and as quickly as possible once you have arrived in Australia. Keep in mind that you should apply for the TFN (or for both if required) before you start working in Australia, otherwise you will be taxed at a much higher rate.
Do you want to know more about TFN and ABN? Please read this article.
When you start working in Australia, you will need to fill out a Tax File Number declaration form in which you will be asked to provide your TFN and whether you are an Australian or foreign resident for tax purposes. Residency for tax purposes is different from immigration residency, so you will have to make a fresh determination when you do your taxes. Even if you are the citizen of a foreign country you may, in fact, qualify as an Australian resident for tax purposes; to mention just one example, if you have come to Australia to study and are enrolled in a course that is more than six months long, you are regarded as an Australian resident for tax purposes. If you need to determine your residency status you can use the ATO decision tool on the Australian Government website by following this link.
When you have given your employer your Tax File Number, only the right amount of tax will be withheld from your wage. In Australia, the taxation system is based on how much you earn per pay cycle, weekly, fortnightly or monthly. The tax calculation multiplies that figure to the number of pay cycles in a year, and then you are taxed for the yearly bracket that you fall under in that pay cycle. In others words, the more you work and earn, the more tax you end up paying (to a maximum of 45%). Generally speaking, If you are a casual employee employed on an hourly basis, your working hours might vary from week to week, therefore also the tax withheld will vary from week to week.
In Australia, the financial year ends on June 30th. Within 14 days from this date, your employer is required to provide you a payment summary (PAYG) which shows how much income you received and the total amount of tax you paid in the last financial year. Once you have this document, it is possible for you to lodge your tax return.
How and when do you have to lodge your tax return?
It is possible to lodge your tax return anytime between July 1st and October 31st. You can choose to prepare and lodge your own return or use a registered tax agent. If you decide to lodge your tax return online using the online ATO service, it should take approximately 2 weeks to be processed by the Australian Taxation Office and perhaps an extra week for you to receive any refund.
When it comes time to complete your tax return, in many cases you do not need to declare any income you earnt prior to arriving in Australia – you only need to declare income you have earned while living and working in Australia. Only if you undertake a paid work overseas while on an Australian temporary visa, you may need to declare this income as well.
If you are unsure about lodging a tax return, the best thing you can do is to either use a registered accountant or a Tax Help volunteer. You may also be able to ask someone you work with to give you some heads up, but because it is important to know what income to declare and what not to, if you have any doubts it is recommended to contact a tax professorial; in case you declare more income than you actually earnt, for example, money earnt before you arrived in Australia, it will appear as if you have not prepaid enough tax to cover your yearly tax assessment, this means that you will get a tax bill, rather than a tax return.
If you need any help with your Tax return application you can look up on the internet for the closest registered Tax accountant, but if you find it easier applying from home, there are different websites which offer specialised online services as Tax Back or Express Tax.
Tax Return Checklist
To ensure you are totally prepared to submit your tax return all the documents that you will need are listed below:
- PAYGs from each of your employers plus details of other income earned in Australia
- All your payslips (in case you do not have all the PAYGs from each of your employers)
- Tax File Number (TFN)
- Australian Business Number (ABN)
- Full name, postal address, telephone number
- Documents (receipts, bills…) capable of an expense report serves as proof of expenses incurred in the work environment (clothing, tools …) called “Work related expenses”
Leaving Australia permanently
In case you are leaving Australia permanently, but you are still on Australian territory, you may be eligible to lodge an Australian tax return early; If you meet the eligibility requirements you must lodge a paper return, which takes longer to process. All the instructions can be found following this link.
In case you have already left Australia, you can lodge your return online from your home country, but be sure you indicate in the appropriate section that you do not reside in Australia and that, if you do not have an Australian bank account anymore, any tax refund must be deposited into the international bank account indicated by you. Please note an international bank transfer fee will apply.
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