Am I an Australian resident for tax purposes ?

Working holiday visa

Young people on working holiday visas are treated as residents for tax purposes if they satisfy ALL of the following conditions:

  • Lived continuously for 6 months or more in Australia ( the 183 days rule)
  • Held one job for that whole time
  • lived in one single place for that whole time

 

 

Why do you get so much back?

 

Many holiday makers approach tax agents by stating that they are not residents and therefore entitled to get all they tax paid back.

This statement is wrong in so many ways, shapes and forms.

to explain it easily let’s say that you earned $80,000 during the 2014 tax year.

The facts are when you apply for a Tax File Number as a holiday maker, you are given one as Non-Resident for tax purposes and the withholding rate from each dollar you earned  is 32.5 cents on the first $80,000, according to the 2014 Non-Residents tax rates

Non-Residents Tax Rates 2013-2014

Taxable income

Tax on this income

$0 – $80,000

32.5c for each $1

$80,001 – $180,000

$26,000 + 37c for each $1 over $80,000

$180,001 and over

$63,000 + 45c for each $1 over $180,000

 Assuming that you do satisfy the residency rules and you’re then deemed to be a resident for tax, the Residents Tax Rates will apply where you pay no tax on the first $18,200 earned,. 19 cents for each $1 over $18,200, .325 cents on each $1 over $37,000

Residents Tax Rates 2013-2014

Taxable income

Tax on this income*

0 – $18,200

Nil

$18,201 – $37,000

19c for each $1 over $18,200

$37,001 – $80,000

$3,572 plus 32.5c for each $1 over $37,000

$80,001 – $180,000

$17,547 plus 37c for each $1 over $80,000

$180,001 and over

$54,547 plus 45c for each $1 over $180,000

* The above table does not include Medicare Levy

 

As a result of the above scenario your tax refund will be $7,253 or $8,453

How did we work it out?

 

Employer was required to withhold $26,000 on $80,000 (32.5%), the Australian tax office’s cut is $17,547 without Medicare and $18,747 with Medicare (1.5% Medicare levy is applicable to certain countries) * the difference you receive is the additional tax taken from your pay.

So unless you are an Australian resident for tax purposes living on the lowest income  tax bracket you won’t get all your tax back.

 

The ATO offers a handy Tool to help you determine your residency status

http://www.ato.gov.au/Tax-professionals/Prepare-and-lodge/Tax-Time-2013/Before-you-lodge/Residency-for-tax-purposes

 

 

Written by

Owner of HAZ Accountants, being in the industry for over a decade and possess a detail knowledge of the income tax laws, including GST, Capital Gain Tax, Fringe Benefit Tax, Company and trust formation and tax implications.

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