We are in the Tax Return era and we certainly have several questions, how is it done? Is it independent of the visa we have? Is it only if I work with ABN? And what happens if I work with TFN? With this simple guide, we will try to help you explaining everything you need to know about the Tax Return.
Every year in Australia, between June 30 and October 31, the Tax Return is performed (closing time of the fiscal year). This declaration is made by entering the website of the ATO (Australian Taxation Office) and must be made by all those who have legally worked in this country, including Work and Holidays and Students with visas equal to or greater than 6 months in duration.
The amounts and percentages of the refund or payment of taxes depend on the type of Visa, the income generated, the Deductions and if you worked with TFN or ABN. The process must be done directly on the ATO website where your taxes are calculated automatically, what do you need?
- Your passport
- Your TFN and ABN number (if you work independently)
- Your bank details
- Your Payment Summary (a document that your employer must send you with the detail of all payments) and/or the invoices or invoices issued
- All the invoices or receipts of the Deductions (which are all the expenses you have incurred to carry out your work, for example, work clothes or some specific certification)
What if I have a Student Visa?
In the case of those who have worked with TFN, it is your employer who discounts your taxes and pays them directly each time your salary is deposited. However, you should file the tax return when the tax year ends, as you may receive tax back. How is that? In the case of the Student Visa, if your income was less than AUD 18,200, the taxes withheld by the government up to that amount will be returned to you. On the other hand, when you make the declaration you can and must add your Deductions.
In the case of those who work with ABN, they are considered “independent” and the payment of taxes must be made directly at the end of each fiscal year. Deductions must also be presented and will be deducted from the total amount to be paid. The detail of the percentages for Student visas are as follows:
- If you have earned less than AUD 18,200, they will refund the taxes that your employer or employers have withheld.
- In case your income is between AUD 18,200 and AUD 37,000, you must pay 19% only on those earnings that exceed AUD 18,200.
- If your income is higher than AUD 37,000, you must pay a base fee of AUD 3,572 plus 32.5% of each dollar that exceeds the first AUD 18,200
How is it the case with those who have Work and Holiday Visa?
In the case of people with Work and Holiday visa, they must pay taxes from the first dollar earned. If they work with TFN they will not receive return tax but they could receive for Deductions. In the case of working with ABN they can also and must present the Deductions that will be deducted from the final amount that they must pay according to these percentages:
- If your income was less than USD 37,000, you must pay 15% of the salary in taxes.
- If the annual income is greater than USD 37,000, the tax comprises 32.5% of the total amount.
What are deductions?
Deductions are all the expenses you have had to make to be able to do your job. On the ATO website, you can review the full details and answer your questions. Some of these expenses can be: work uniform, as long as it has the company logo or is a basic element for your work performance (for example, iron-tipped shoes or Chef’s uniform), or even a course or certification necessary for your work. Before presenting these deductions, we recommend you take into account the following points:
- You must have spent the money yourself, and it was not reimbursed by your employer or company.
- The expense must be directly related to earning your income and must be of the first necessity to perform your job.
- They must have a voucher to prove it, that is, the bank slip, invoice or voucher.
- The nature of the expense should not be private, for example, lunches or commuting to and from work are considered private expenses.
- Medicare Levy is a tax paid by Australians who have Medicare, but that both students and WHV have private insurance, they do not have to pay, so if you have earned more than AUD 22,980 you can receive 2%, for more details go to this link.
New benefits for Covid19
There are new changes and updates in the process as a result of COVID-19. Since 2020, there are certain changes in the tax return, especially considering the deductions of those who have worked from home. For more details, you can enter the ATO page.
Broadly speaking, the measures and support available for individuals impacted by COVID-19 include:
• early access to superannuation which is not assessable income.
• the introduction of an optional simplified method to claim 80 cents for each hour you work from home (from 1 March 2020 and extended through to 30 June 2021) to cover all deductible running expenses.
Those who have had to work at home, for example, can deduct the costs of using the telephone, internet, part of the expenses of electricity used for lighting or heating, among others. You can also include expenses on computers, printers, furniture or desk chairs if they were necessary for proper job performance.
Ok, we already understood. Now, what are the next steps?
If you want to start the process today, you must follow these 2 steps:
- Open a MyGov account and link the account with the ATO.
- Make the Tax Return following the steps indicated on the web.
And ready! It may seem complex but it is simpler than it sounds! If you want to find out more, we recommend that you visit ATO’s YouTube channel at this link where you can access free tutorials. You do not need an accountant to perform the Tax Return, but you can hire one if you wish.
Do you want to travel, study or live in Australia? Leave us a comment below or contact us today at email@example.com to advise you on everything you need. There is a wide variety of courses and programs available!
See you in Australia, mate!