Do I need to lodge a tax return in Australia?
- If you are not an Australian resident but are working or have worked in Australia (including those on working holiday visas) you are required to lodge an Income Tax return.
- As a non-resident you will pay tax differently from residents, such as not having to pay the Medicare levy but also not being liable for the tax free threshold.
- The Australian tax year ends on June 30 and you are required to lodge your tax return by October 31, unless you have requested an extension.
- If you become an Australian resident during the income year you will receive residency tax rates on a pro rata basis.
- If you are leaving Australia permanently before the tax year ends and are not earning any income in Australia, you can lodge an early tax return.
- To lodge an Income Tax return you will need a Tax File Number (TFN). This is a unique number issued to individuals that is used for ID and record keeping purposes and without one you will be at a serious disadvantage (see below).
Important! If you are opening an Australian bank account or will be earning money in this country you should get a Tax File Number (TFN) as soon as possible. Although it is not a compulsory requirement, without one your employer must take 46.5% of your wages in tax and you will be charged the same rate on any interest accrued in your bank accounts. Once you arrive in Australia, with a valid visa, you can apply online for a TFN.
For further information go to www.border.gov.au
Tax Rates 2015-2016
What Is Superannuation and am I entitled to receive it?
Superannuation (or Super) is the retirement or pensions program in Australia. It is compulsory for most employers to pay super contributions to their employees who have a monthly wage over $450. The amount paid must be at least 9.5% of your ordinary earnings which was effective from 1 July 2014. You can boost your super with your own contributions subject to maximum age-based limits which has tax advantages and there are government co-contributions available which can encourage you to save. The money set aside is invested by your Super fund in stocks, shares, property and other considered investments and can be accessed at 60 years old or when you retire over 55 . Temporary residents who receive super whilst working in Australia can receive their benefits when they leave – this is called a Departing Australia Superannuation Payment (DASP).
Living away from home allowance (LAFHA) – What is it and am I eligible?
LAFHA was a system implemented in 1986 to compensate employees for additional costs incurred such as accommodation and food, whilst temporarily living away from home for employment reasons. The cost difference incurred could be claimed as a tax benefit. Recent government changes have severely restricted this allowance.
For more information on LAFHA and recent reforms go to www.lafha.com.au
What is Fringe Benefits Tax?
Fringe benefits tax (FBT) is paid on certain benefits employers provide to their employees or their employees' associates in place of salary or wages.
For more information go to www.ato.gov.au
Tax & Australian Business Owners
- Most Companies are required to pay a flat rate of 30% tax with some concessions available for small businesses that generate less than 2 million dollars annually.
- If you operate as a sole trader you can use your personal Tax File Number (TFN) for tax and accounting purposes. Partnerships, companies and trusts must also apply for a business Tax File Number (TFN).
- An Australian Business Number (ABN) is recommended for most businesses and is a legal requirement for some. If you choose not to have an ABN other businesses can withhold 46.5% of payments to you.
- If you are paying employees or directors you must be registered for PAYG (pay-as-you-go) and withhold tax from payments you make to them If you provide additional non-cash benefits, such as a company car, you may be required to pay FBT (fringe benefits tax).
- If you are paying employees over $450 per month you may be required to pay compulsory super contributions. Super is the Australian pensions or retirement program.
- Books and records must be preserved for a period of 5 years for tax purposes.
For more information go www.ato.gov.au