Backpacker’s Guide to Australian Tax

Backpacker’s Guide to Australian Tax

You’re a backpacker. That puts you somewhere between a tourist and a…resident?

Actually, yes. The Australian Tax Office may consider you an Australian resident for tax purposes under certain circumstances. As a backpacker, there are some other things you should know as well that could affect your tax return. We know you’re out and about so let’s not waste time getting down to the most frequently asked questions.


Are you a resident for tax purposes?

This sounds like a trick question. You don’t have a permanent residence here. Your family doesn’t necessarily live here. You left your dog with your mom when you came here. However, when it comes to taxes, residency is based on what you do while you’re touring the country. As a resident, you are able to lodge a tax return and claim tax back. If you are deemed a nonresident, then you are not eligible for a refund.

Generally speaking, the ATO considers you a resident for tax purposes if ANY of the following applies:

  • You have always lived in Australia.
  • You moved to Australia and live here permanently.
  • You have been in Australia for at least six months, and for most of the time, you have been working the same job and living at the same place.
  • You have been in Australia for more than half of the financial year, unless your usual home is overseas and you do not intend to live in Australia.

Now, regardless of whether or not you are, in fact, an Australian resident for tax purposes, you’ll still need to lodge a tax return for the work you’ve done while visiting Oz.


Do you need a specific visa?

In order to stay in Australia for any substantial length of time and earn Australian-sourced income, you’ll need a visa. Based on the intent of your visit, you have a few options.

  1. Visitor Visa. You’ll want to check this one out if you plan to visit Australia on a 3, 6 or 12 month trip to visit family and friends, or for holiday and recreation. The clock starts ticking once the visa is granted.
  2. Working Holiday Visa. This visa is ideal for those who want to study or work (or both) while visiting Australia. Once granted, the visa will allow you 12 months to legally work in the country. You are also granted 4 months out of the 12 to study. With this visa, you can leave and re-enter Australia as you please. This is most beneficial to those who want to split their time between New Zealand and Australia.
  3. Working Holiday Visa Extension. And if you really hate the idea of your visit to Oz coming to an end, you’ll want to consider this visa. It grants you an additional 12 months to work and study once your original Working Holiday Visa expires. You’ll be eligible for this extension as long as you’ve completed 3 months of specified work* in regional Australia** while on your first visa time frame.


*Specified work is defined as any type of work that is done in an industry or field specified by the Australian government.

**Regional Australia is defined as the allocated areas of the country which qualify for the scheme, usually consisting of more rural areas.


Can backpackers claim the tax-free threshold?

Backpackers can, in fact, claim the tax-free threshold…sometimes. If you are considered an Australian resident for tax purposes, then you could be eligible. If you were a resident for the entire financial year, then you’ll be able to claim the entire tax-free threshold amount. If you were considered a foreign resident for some months out of the financial year, then your tax-free threshold will be reduced accordingly. This amount, known as your adjusted tax-free threshold, consists of two components:

  1. The initial flat amount of $13,464
  2. The additional amount of $4,736 apportioned for the months you have lived in Australia during the financial year (1 July – 30 June). This includes the month you actually arrived.


Let’s take a look at an example:

Audrey has been living and working in Australia as a resident for tax purposes for 5 months out of the financial year. In order to calculate her partial tax-free threshold amount, she would use the following formula:


= $13,464 + (($4,736 x 5)/12)

= $13,464 + $1,973

= $15,437


This means that Audrey will only need to pay tax on any income exceeding $15,437 in that financial year.


Can you lodge your tax return before leaving Australia?

The ATO has certain restrictions as to who can lodge an early tax return (prior to 1 July) depending on whether you are a resident or nonresident.


Are you a nonresident (aka foreign resident) for tax purposes? You can lodge early if:

  • you are leaving Australia permanently, and
  • you will no longer derive Australian-sourced income (aside from interest, dividends and royalties).


Are you an Australian resident for tax purposes? You can lodge early if:

  • you are leaving Australia, and
  • you are ceasing to be an Australian resident for tax purposes, and
  • you will no longer derive Australian-sourced income (aside from interest, dividends and royalties).


Keep in mind that it’s not always in your best interest to lodge early. If you are not leaving Australia permanently or you will continue to receive Australian-sourced income (aside from interest, dividends and royalties) after leaving the country, you should lodge your tax return during the actual tax season, which falls between 1 July and 31 October.


How can you claim your superannuation?

Whether you are a permanent resident or temporary resident for tax purposes, your employer should still pay super contributions to you if you work a full or part time position in Australia. Any of these contributions must remain in your super fund account while you are in the country. However, you can claim your super after leaving Australia if you:

  • were in Australia on an eligible temporary-resident visa (excluding visa subclasses 405 and 410),
  • had super contributions paid by an employer while you were in Australia, or
  • have left Australia and your working visa has either expired or been cancelled.


Where can backpackers lodge their tax returns?

Whether you’re still soaking up the sun (and those Tim Tams) in Oz or you’re a flight away, back home, you can lodge your Australian tax return online with E-Lodge. Many backpackers feel the need to visit a tax advisor face-to-face. With E-Lodge, we give you the option to speak with an advisor or walk you through lodging DIY-style. The best part? You can complete your tax return in as little as 10 minutes so you won’t have to miss out on any part of your next adventure!


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