You’ll need a Tax File Number
All people who work in Australia must make sure they meet their tax obligations. To keep track, the Australian Tax Office issues each individual with a Tax File Number (TFN).
Getting yourself a TFN should be at the top of your to-do list once you arrive in Australia. Without one you’re likely to pay more tax than you need to, miss out on government benefits as well as the ability to lodge a tax return online.
What you pay tax on
You’re taxed on your salary, wages, investment and business income earned in Australia. You’re also taxed on income you get from bank accounts, investments (including shares) and properties anywhere in the world.
Unless you’re hired as an independent contractor, your employer will withhold tax from your wage packet – it’s called Pay As You Go (PAYG). PAYG means you’re not hit with a huge tax bill at the end of the year. At the end of every financial/ tax year the company you work for will give you a payment summary. This tells you how much money has been withheld for tax purposes throughout the year.
Are you a ‘resident’ for tax purposes?
You need to work out if you’re considered an Australian resident or foreign resident by the Australian Tax Office (ATO). When it comes to tax, it does make a difference.
If you're an Australian resident for tax purposes - you declare income you earn in Australia and internationally on your tax return.
If you're a foreign resident - you declare on your tax return income you earn in Australia, including employment income, rental income, Australian pensions and annuities and capital gains on Australian assets. You aren’t entitled to the tax-free threshold which means you pay tax on every dollar of income you earn in Australia.
Do-it-yourself or use an expert?
If you’re an Australian resident for tax purposes and had tax withheld from your wages as part of PAYG, you have to lodge a tax return.
You can lodge a tax return yourself, but it might be a good idea to work with a registered tax agent / accountant. Their expertise can be invaluable, particularly when dealing with foreign tax issues and foreign income tax offsets.
The Australian tax year starts on 1 July and ends on 30 June the following year. You have until 31 October to file your tax return unless you’re using a registered tax expert / accountant – if you register with them before 31 October they can organise an extension so you can lodge your tax return at a later date.
What you’ll need for your tax return
Make sure you’ve the following information handy:
- Payment summary, which includes your gross income from that payer, total tax withheld and a tax number for your payer
- Summary of any interest you’ve earned on your bank accounts
- Details of overseas pensions or foreign income
- Information relating to investment income, shares, dividends, managed funds
- Private health insurance certificate and receipts for medical expenses
- Details of child support payments
- Receipts from any donations made to charity
- Receipts for any work expenses incurred.
It’s worthwhile having your Australian bank account details (BSB and account number) handy for faster access to any potential refund.
Keep your tax records for at least five years – even if you’re not intending to stay in Australia that long. It’s also good to know if you don’t pay your tax, the ATO may take action against you.