Please note that this is for general information only. We recommend you speak with a specialist tax provider regarding your individual circumstances.
The Australian Tax System
Principally, the Federal Government imposes taxes.
However, State Government also levy taxes such as petrol tax, stamp duty, land tax and payroll tax. Local governments levy real estate taxes (land rates) and water rates.
A Good and Services Tax (GST) of 10% is imposed on all goods and services with basic foods exempted. This tax has resulted in the abolition of several other taxes such as wholesale taxes. All listed prices should include the GST component.
Tax Year
The tax year for income tax purposes is; 1st July to 30th June the following year and you are required to lodge your tax return by October 31, unless you have requested an extension.
Taxation of Individuals
The basic rule is that a resident of Australia is taxable on their worldwide income unless the income is exempt according to the Income Tax Assessment Act 1986.
A person is a resident of Australia if he or she resides in Australia, even intermittently, for more than one half of the year of income unless the authorities are satisfied that the person’s usual place of abode is outside Australia and there is no intention to take up residence in Australia. An individual who is a resident of Australia for only part of the year of income is taxable as a resident for that part year.
- If you are not an Australian resident but are working or have worked in Australia (including those on working holiday visas) you are required to lodge an Income Tax return.
- The Australian tax year ends on June 30 and you are required to lodge your tax return by October 31, unless you have requested an extension.
- If you become an Australian resident during the income year you will receive residency tax rates on a pro rata basis.
- If you are leaving Australia permanently before the tax year ends and are not earning any income in Australia, you can lodge an early tax return.
- To lodge an Income Tax return you will need a Tax File Number (TFN). This is a unique number issued to individuals that is used for ID and record keeping purposes and without one you will be at a serious disadvantage (see below).
The Pay-As-You-Go (PAYG) System
Australia has a PAYG income tax system. Employers withhold tax from employee’s remuneration in accordance with incremental scales issued by the tax office. At the end of the financial year the employer is required to give each employee a summary of income earned and tax deducted, a copy of which must be attached to the individual’s income tax return. Interest and dividends on investments are included as taxable income.
Tax File Numbers (TFN)
To lodge an Income Tax Return, you will need a Tax File Number (TFN). This is a unique number issued to individuals that is used for ID and record keeping purposes and without one you will be at a serious disadvantage Although it is not a compulsory requirement, without one your employer must take 46.5% of your wages in tax and you will be charged the same rate on any interest accrued in your bank accounts. Once you arrive in Australia, with a valid visa, you can apply online for a TFN.
Fringe Benefits Tax
Fringe Benefits Tax (FBT) is paid on certain benefits employers provide to their employees or their employees’ associates in place of salary or wages.
Capital Gains Tax
A Capital Gains Tax (CGT) applies to capital gains realised upon sale of assets. This tax does not apply to a taxpayer’s sole or principal residence, certain types of motor vehicles and other minor assets
Superannuation
What Is Superannuation?
Superannuation (or Super) is the retirement or pensions program in Australia. It is compulsory for most employers to pay super contributions to their employees who have a monthly wage over $450. You can boost your super with your own contributions subject to maximum age-based limits which has tax advantages and there are government co-contributions available which can encourage you to save. Temporary residents who receive super whilst working in Australia can receive their benefits when they leave – this is called a Departing Australia Superannuation Payment (DASP).
Right of Accompanying Partner to Work
The right of the accompanying partner to work depends upon the sort of employment visa that has been issued.
Please contact the Department of Home Affairs for any further information on 131 881.
