Tag: resident for tax purposes

Posts Tagged ‘resident for tax purposes’

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.

Read the rest of this entry »

5 Reasons To Report Offshore Income Under Project DO IT

With Project DO IT, you can come forward with unreported foreign income without fearing high penalties and fraud evasion.

The ATO has announced a hand full of changes lately. The new Australian budget includes a budget repair levy,  changes in family tax benefits, and much more.

Along with the new budget, the ATO has also announced a new initiative titled “Project Do It”. The initiative allows taxpayers a way to disclose foreign income they previously omitted to declare without facing large penalties.

That means, if you are an Australian resident and have offshore income, you should report your income right away. In fact, you can do so on E-Lodge.

Do Australians really need to report offshore income?

Yes, Australian residents must declare their worldwide income (and are taxed on it). You must declare all of your income, no matter what the source. Foreign income includes;

  • foreign pensions and annuities,
  • foreign employment,
  • foreign investment,
  • foreign business,
  • capital gains on foreign assets.

Read the rest of this entry »

Can I Claim 100% of My Tax Back When I Leave Australia?

Even if you end up getting a refund, chances are you’ll still end up paying taxes

Many working holidaymakers who only live and work in Australia for a short time leave Australia expecting to get all of their taxes back in the form of a refund. Many automatically assume that because they are citizens of another country that Australia won’t tax them.

Unfortunately, however, this is not true. Many are shocked to discover when they prepare their tax returns that they aren’t getting everything back or, worse, that they actually owe a large tax bill to the ATO. Here at E-Lodge “Why do I owe so much tax??!!” is a common query from nonresidents.

 

Everything depends on residency (for tax purposes)

Residency for tax purposes is not the same thing as residency for immigration purposes. You can be a citizen of a foreign country and still be an Australian resident for tax purposes. Tax residency depends on how long you have been in Australia and what you’ve been doing here. All the details of tax residency are a little beyond the scope of this article, but you can find more information in one of our previous blog posts. Read the rest of this entry »

Can You Get a Tax Refund After a Two Year Working Holiday Visa?

Working holidaymakers may be able to get a tax refund, but they probably won’t get all of their money back

Yes, as a visitor to Australia on a working holiday visa, you may be able to get a refund when you lodge taxes. Just don’t expect to get back everything you’ve paid. The ATO will keep some of your tax, even if you’re a nonresident.

Exactly how much you will have to pay in taxes depends broadly on two factors (obviously it’s a lot more complicated, but we’re generalizing here):

  • your residency for tax purposes, and
  • your income

Who qualifies as a resident for tax purposes?

Take note that residency for tax purposes is not the same as immigration residency. The ATO considers you an Australian resident for tax purposes if Read the rest of this entry »

How to Claim Tax Free Threshold Australia

Luckily, the first $18,200 of your income is tax-free.

The tax-free threshold has more than tripled since 2011-2012 at $6,000 to a whopping $18,200. This threshold currently remains for the 2017 tax year.

Australia’s progressive tax code is divided into five different income brackets, each with its own tax rate.

The tax rate for the lowest income bracket, that which falls between taxable incomes of $0 and $18,200, has a tax rate of 0%. The $18,200 upper limit of the lowest bracket is what’s known as the tax-free threshold because the first $18,200 of your income is not taxed.

This means that you only pay tax on the income that falls above this lowest bracket. If all of your income is within this first bracket, you pay no tax at all. And even if your total income falls into a higher bracket, you still pay no tax on the first $18,200 of your income. When you factor in the Low Income Tax Offset (LITO), you can earn up to $20,542 without paying any tax.
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Am I an Australian Resident for Tax Purposes?

How to determine your residency, how it affects you, and what to do if it changes

If you’re a working holidaymaker visiting Australia, you’ll probably need to file taxes. But before you can lodge your return with the ATO, or even prepare it, you’ll first have to figure out if you are an Australian resident for tax purposes.

Who qualifies as a resident?

Residency for tax purposes is different from immigration residency, so you’ll have to make a fresh determination when you do your taxes. Even if you are the citizen of a foreign country you may, in fact, qualify as an Australian resident for tax purposes.

You are a resident for tax purposes if you

  • have always lived in Australia
  • moved to Australia and now live here permanently
  • have been in Australia continuously for six months or more and for most of that time you worked the same job and lived in the same place
  • 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
  • go overseas temporarily and you do not set up a permanent home in another country, or
  • you are an overseas student who has come to Australia to study and are enrolled in a course that is more than six months long.

The Determination of Residency tool on the ATO site can help you make the determination if there’s any ambiguity.

It’s a good idea to figure out your residency status early on so you can make sure your employer is withholding taxes at the appropriate rate.

What difference does it make?

Residency makes a big difference in terms of how you are taxed.

First off, residents are taxed on their worldwide income. Nonresidents, on the other hand, are taxed only on their income from Australian sources.

Residency also changes the tax rate you have to pay. Starting on 1 July 2012, the marginal tax rate for Australian nonresidents earning less than $37,000 will shoot up from 15% to a whopping 32.5%. This means that all Australian nonresidents making less than $80,000 are taxed at 32.5%.

Australian residents, by contrast, aren’t taxed at all beneath an income threshold of $6,000, are taxed at 15% between $6,001 and $37,000, and at 30% between $37,001 and $80,000. So, Australian residency can be quite advantageous from a tax perspective.

What if my residency changes?

It’s not uncommon for people who begin the financial year as nonresidents to become residents halfway through. If that’s the case, answer “Yes” on your return to the question, “Are you an Australian resident?”

Your income will be taxed at the same rate as an Australian resident, but because you were a nonresident for part of the year, you will be taxed at a lower tax-free threshold. You are entitled to a pro-rata tax-free threshold for the number of months you were an Australian resident.

Don’t forget, nonresidents don’t have to pay the Medicare levy, so you can claim an exemption for the number of days that you were a nonresident. Also, once you officially become an Australian resident, you will need to declare the worldwide income you receive from the time you become a resident.

E-Lodge makes doing taxes easy for residents and non-residents. Not only that, but most online tax sites don’t offer international bank transfer. With E-Lodge, you can even have your refund deposited into a foreign bank account!

Photo via paul bica on Flickr.

15 Backpacker Tax Tips

Quick tips to help you take care of your Australian tax return

A working holiday in Australia is full of so many wild, foreign, eye-popping experiences. The last thing you want to think about is taxes. But if you earn money in Australia you’ll have to. Taxes will likely be withheld from your wages and the Australian Taxation Office – known as the ATO – will likely require that you lodge (aka file) a tax return.

Don’t despair quite yet – there’s a good chance you could get tax back in the form of a nice refund. So here, in rapid-fire succession, are AustralianTax’s top 15 tax tips for navigating, well, Australian tax.

1) Claim your tax back – When you lodge, you can in all likelihood expect a refund. In fact, the average backpacker gets about $2,000. So don’t dodge lodging a return. Use a service like E-Lodge to make sure you get the most out of a foreign tax code.

2) Lodge = file – Just as Aussie’s insist they live in Oz and spend the weekends getting their wobbly boot on, they also have a special set of slang when it comes to taxes. Lodging a tax return is what the rest of the world would refer to as filing a tax return. Read the rest of this entry »

How to Lodge a Working Holiday Visa Tax Return

When to file your Australian tax return and how to determine your residency status

Australia requires foreigners who spend a working holiday in Australia to file taxes. But this isn’t entirely cause for lament – there’s a good chance you could get tax back!

Before you launch into the Australian tax filing process, there are a couple things you should know:

  • Australia has a unique tax year that begins on July 1 and ends on June 30 of the following year.
  • The tax season runs from July 1 until October 31, which means that you can lodge your tax return any time between these dates. If you haven’t lodge by the end of October, your return will be considered late.
  • There is a special exception to these dates for people who are leaving the country. If you will no longer be in Australia as of June 30, you can file before tax season starts.


Forgot to file a return when you were working in Australia? Has it been several years since you left? Never fear. You can still file a late tax return. Not only can you still file, you may still be eligible for a refund. Read the rest of this entry »

Leaving to Work in L.A.? Here’s What You Need to Know Taxwise

You’ve packed your bags (and that E-3 visa). You’re just forgetting one thing…your taxes!

You’ve unfolded the large, clumsy map of Los Angeles. Could have just googled it but, hey, there’s something about running your finger over the spaghetti-like tangle of freeways and mythical boulevards – Santa Monica, Ventura, San Bernardino, Sunset, Hollywood – that sends a thrill though your bones.

You’ve angled the blinds just so. The Qantas ticket sits snug between the pages of your much thumbed copy of Raymond Chandler’s Collected Stories. Your E-3 visa is all set to go. The old-fashioned glass beams gold with bourbon.

Before you trade the land down under for La La Land and head for that plum job in America, you should consider your situation, tax-wise. Here are some important things you should pay attention to.

To be or not to be… an Australian resident

The first question you should ask yourself is the following. Will you remain an Australian resident for tax purposes during your time of your employment in LA or will you become a foreign resident instead? Read the rest of this entry »