When you visit Australia you may want to work here, or you may have already obtained work here. Before you start work, make sure you have permission from the Department of Immigration and Citizenship (DIAC). They can tell you which visas you need. Everyone in Australia has the right to share in and enjoy the Australian lifestyle, and with this comes the responsibility to comply with tax obligations.
CHECKING YOUR RESIDENCY STATUS
If you are not a resident of Australia and you are here temporarily, it’s likely you will be taxed as a non-resident, depending on your circumstances.
APPLYING FOR YOUR TAX FILE NUMBER
Before starting work you should get a tax file number (TFN). A TFN is your personal reference number in the Australian tax system and is one of your most important forms of identification. If you begin work before you have a TFN, you have 28 days to get one and give it to your employer. If you don’t, your employer must take tax from your pay at the highest rate.
Also make sure your super fund has your TFN. This will make it easier to keep track of your super, move it between accounts, and receive super payments from your employer or the government.
You can apply for a TFN:
- online by visiting the ATO website www.ato.gov.au and clicking on ‘Get a tax file number’, or
- using a paper Tax file number – application or enquiry for individuals (NAT 1432) form. You can get a copy of this form from www.ato.gov.au or from an ATO shopfront or selected newsagents.
PROTECTING YOUR TAX FILE NUMBER
Your tax file number (TFN) is an important number that must only be used by you. It’s like a password or personal identification number. You must not use another person’s TFN or allow someone else to use your TFN.
You can keep your TFN safe by following these tips:
- don’t provide it over the phone or internet when applying for work
- don’t carry it in your purse or wallet, or store it in your mobile phone
- destroy documents containing your identity details
- install up-to-date anti-virus software on your computer
- only provide your identity details to trusted or reliable organisations
- if you use a tax agent check they are registered on the Tax Practitioners Board website at www.tpb.gov.au.
Only certain people can ask you for your TFN, including:
- the ATO
- your superannuation fund
- your bank or financial institution
- some Australian Government agencies
- your employer, but only after you have started work with them.
Tax is money that people and businesses pay to the Australian Government. The money is used to provide services to the community, such as health, education, defence, roads, social security and welfare payments.
If you start working in Australia, your employer will deduct tax from your pay and send it to the ATO.
THE AMOUNT OF TAX YOU MUST PAY
The amount of tax you must pay depends on:
- how much you earn
- whether you have a TFN and have given it to your employer
- whether you are an Australian resident for tax purposes
- whether you have to pay the Medicare levy.
If you are paid A$450 or more in a month, your employer will generally contribute an amount equal to 9% of your earnings from your ordinary hours of work into a superannuation fund for you. Over the next few years the rate of contributions will gradually increase from 9% to 12% to help increase your super savings.
These payments are known as superannuation contributions. This money is paid separately by your employer on top of your pay packet. This is a way of saving money for your retirement. If you entered Australia as a temporary resident, in most cases you can access these contributions when you leave Australia, although they will be taxed.
WHEN TO LODGE YOUR TAX RETURN
After the end of the financial year (In Australia a financial year starts on July 1 and ends on June 30), your employer will issue you with a document called a ‘Pay As You Go (PAYG) payment summary’. Your PAYG payment summary shows how much you earned and how much tax was deducted from your wages. If you leave a job during the year, you can ask for your payment summary at the time you leave and your employer is required to give it to you within 14 days of you asking for it.
You have to declare your income and claim deductions every year using a form called a ‘tax return’ that you complete and lodge with the ATO. You use your records and payment summary details to complete and lodge a tax return.
You can prepare and lodge your tax return in a few different ways, including:
- online using e-tax – this is easiest and quickest, and most refunds issue in 12 business days or less. You can download e-tax for free from the ATO website www.ato.gov.au
- by mail using the paper tax return form included with the Individual tax return instructions (available from ATO shopfronts and selected newsagents), or
- by using a registered tax agent.
If you paid more tax during the year than you needed to, the extra is returned to you as a refund when you lodge your tax return. The fastest, most secure way to receive your refund is to have it sent directly to your bank account using electronic funds transfer, or EFT. This means any money being returned to you will be paid straight into your Australian bank account.
You must also complete and lodge a tax return if you are leaving Australia permanently or for more than one financial year.
For more information about how tax applies to income you earn in Australia:
- visit the website at www.ato.gov.au/individuals
- visit an ATO shopfront (enquiry counter) between 8.30am and 4.45pm, Monday to Friday. To find the location of the nearest shopfront visit the website www.ato.gov.au and search for ‘shopfront’.
- visit www.ato.gov.au/otherlanguages and view ‘Tax in Australia – What you need to know’. ‘Tax in Australia’ provides essential information about tax and superannuation in 16 languages. It explains why Australians pay tax, the need for a tax file number, what to do when starting employment and the need to complete a tax return.
- visit www.ato.gov.au/otherlanguages and view ‘Your business and tax’ for essential information about business tax when you start a small business. It is available in 11 languages and covers topics like business structures, registrations, GST & the BAS, record keeping and employing people.