If your monthly wage is more than $A450, your employer must contribute an additional sum equal to 9.5% of your wage into a superannuation (pension) account for you. If you entered Australia on an eligible temporary resident visa you can, in most cases, access your contributions when you leave Australia, although the contributions will be taxed.
Australia operates under a tax system of Pay-As-You-Go. Meaning that instead of paying one lump sum of tax at the end of the tax year, the employer withholds the appropriate amount of tax from your wages. The payslip provided by your employer usually provides details of the amount of salary paid and the amount of tax withheld. At the end of the financial year (30th of June), you have to submit a tax return to the Australian Taxation Office (ATO). This allows the ATO to calculate whether you have paid enough taxes on the wages you earned. If you have paid less than you should, you get a tax bill. If you have paid more taxes than you should, you get a tax refund.
Not everybody pays the same amount of tax. The tax payable differs depending upon whether you are a resident or a non-resident for tax purposes. There are various criteria for working out if you are resident or not. You can use the residency calculator at ATO’s website or talk about your situation with a tax agent, such as Taxback.com
Generally, working holidaymakers are considered non-resident. From January 2017, working holidaymakers are taxed at a rate of 15% for the first $37,000 of your income. The balance is taxed at ordinary rates, ie. all earnings from $37,001 - $80,000 are taxed at the standard 32.5% rate.
There is a perception amongst working holidaymakers that you can receive all of your tax back if you lodge a tax return.
The amount of tax refund that you receive depends on upon various factors including;
- the total amount of your income
- the total amount of tax withheld by your employer
- Duration of your stay in Australia in a financial year
- Whether you have any allowable deductions e.g. work-related expenses
Residents for tax purposes are entitled to a full tax refund if their gross earnings are lower than $18,200 in the financial year.
Working holidaymakers are generally considered non-resident. They are entitled to claim the overpaid amount of tax their employer charged. For example, a backpacker who earned $10,000 gross income and paid $1,800 in tax will get a refund of $300 as this is the amount of tax overpaid. The 15% tax rate applies to all backpackers on WHV 417 and 462, so they should have only paid $1,500 in tax.
Yes. The majority of workers in Australia are required to lodge a tax return and it's recommendable to file in order to put your tax affairs in order.
Many working holidaymakers are daunted by the prospect of filing a tax return. But the good news is that by filing a tax return, you can claim your tax refund!
You can also ensure that your tax affairs are in order and this will be important when applying for a future visa in Australia.
Some people believe that lodging a tax return is difficult or complicated. However, there are many tax professionals out there who can assist in the preparation of your tax return, such as Taxback.com. The only documents that are usually required are:
Use the tables below if you were an Australian resident for tax purposes for the full year and you are entitled to the full tax-free threshold.
These rates do not include the Medicare levy.
Tax on this income
|0 – $18,200||Nil|
|$18,201 – $45,000||19c for each $1 over $18,200|
|$45,001 – $120,000||$5,572 plus 32.5c for each $1 over $45,001|
|$120,001 – $180,000||$29,467 plus 37c for each $1 over $120,001|
|$180,001 and over||$51,667 plus 45c for each $1 over $180,000|
The above rates do not include the Medicare Levy;
A payment summary is a statement from the employer outlining the full amount of wages you earned and the amount of tax paid in a financial year. This document is quite essential in lodging your tax return. Employers are legally required to give the payment summary to you within two weeks after the end of financial year (by 14th of July) or within four weeks after you leave the company. Payment summary must be collected from each employer you have worked for in that financial year. If you do not have a payment summary you might have to provide other records like final payslip and statutory declaration.
Although it is legal to lodge your own tax return, many working holidaymakers find this difficult due to difficult tax terms and issues e.g. am I a resident or non-resident. A registered tax agent, like Taxback.com, can assist people in lodging their tax return to ensure that the tax return is correct and that the clients get the right amount of refund. If you require assistance or have any queries, please contact Taxback.com’s tax experts at any time. They will take care of the messy tax paperwork and ensure you get your maximum tax refund!