It’s that time of the year again, have you lodged your tax return yet? Completing a tax return, for migrants who are doing it for the first time particularly, can be quite stressful and confusing. To help my fellow newly arrived migrants, I have written about the hows, who, when, whats and everything in between which would definitely help those who are lodging their first Australian tax return and have no idea of how to go about it.
The clean surroundings, nice roads, quality education, and the good health care system. Almost everything that makes Australia one of the best countries in the world are made possible, in part, by the tax that we pay the government.
When is tax time in Australia?
Tax time is when Australians complete and lodge their tax returns i.e. within the 1st of July to the 31st of October. The Australian financial year runs from the 1st of July to the 30th of June the following year.
Who needs to pay their taxes?
Generally, almost everyone need to lodge a tax return every year. The ATO (Australian Taxation Office) has a Do I need to lodge tool which can help you work out whether or not you’d need to do so.In the ATO website, I’ve found a list of ‘circumstances’ that would require a person to submit a tax return, some of them are:
- Those who have had tax withheld from any payments, such as wages, made to them during the financial year.
- Australian residents with a taxable income that exceeded the tax-free threshold of $18,200.
- Foreign residents who earned more than a dollar in Australia.
Of course, there are instances wherein you won’t need to lodge a tax return but if you’ve worked out that that is the case for you, you would still need to inform the ATO, I think through completing a non-lodgment advice.
Are you considered as an Australian resident or a foreign resident for tax purposes?
Being an Australian or foreign resident for tax purposes is not dependent on your visa status in Australia. You can be an Australian resident for tax purposes even if you’re not an Australian citizen or permanent resident.
Apart from those who have always lived here, many others are considered to be Australian residents for tax purposes. Like those who have come to Australia to live here permanently, those who have been here continuously for six months or more, and the overseas students in Australia who are enrolled in a course that is more than six months long. The ATO has a tool that will help you determine your ‘tax residency’.
How much tax do you need to pay?
The amount of income tax you pay depends on how much you earn as well as on your tax residency. Generally speaking, the more money you earn, the higher your tax rate will be. If you’re an Australian resident for tax purposes, the first $18,200 that you earn will be tax free but if you’re a foreign resident for tax purposes, this tax free threshold doesn’t apply to you. Also, businesses/companies have different tax rates than individuals.
What income do you need to include?
You must include all of the income that you’ve received during the financial year. This includes your wages from all of your jobs be it full time, part time, casual, cash jobs, earnings from being self-employed or through any other ways. You should also include bank account interests, payments received from the government, if you own a rental property, investments (even if they’re overseas) etc. So basically, if you’ve earned money from it, it must be included.
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What deductions can I claim?
You can claim deductions for some expenses related to your job. For example, someone I know works as a disability support worker so a part of his job is community access. He uses his own car to bring his clients to places where they need to go such as to a doctor’s appointment. He was able to claim his expenses for those trips as vehicle and travel expenses. Note that going to and from work doesn’t count.
As for myself, I was able to claim the expenses that I made to buy my uniform and non-slip shoes for work. There are a lot of other deductions that you can try to claim such as home office expenses, education expenses, tools and equipment etc. Just make sure that you have records of these i.e. receipts and payment summaries. You must keep these records for at least five years from the day you lodge your tax return.
How do I pay my taxes? Do you need an accountant?
There’s no one way of preparing and lodging your tax return. I guess you could say that it’s a matter of preference. Would you need an accountant/ registered tax agent to do it for you? Not really but personally, I am for it. I use them because it makes the whole process a lot less stressful and it gives me peace of mind knowing that a professional has handled it for me. All I had to do was give them all the information that they asked for. I didn’t really need to figure anything out. In my opinion, this is the way to go specially for migrants who are lodging their first ever Australian tax return. They’re not really as expensive as you think.
However, if you’d rather do it yourself, that is also possible. You can lodge it online with myTax (you’d need to create a myGov account and link it to ATO) or by mail through a paper tax return. To know the process for the paper tax return, you can click here. I believe that lodging it this way takes quite a bit more time.
What do I need to lodge my tax return?
Some of the information/ documentation you’d need are:
- Tax file number (TFN)
- Bank account details (for your refund)
- Income statements (to prove any money you made)
- Centrelink payment summaries
- Proof for the deductions you’re claiming i.e. receipts for work-related expenses etc.
- If you’re married, proof of your spouse’s income
- Private health insurance information (if you have cover)
Registering for your Tax File Number (TFN) – permanent migrants and temporary visitors
I’ve registered for a TFN online through the Individual Auto-registration (IAR) system. As I have mentioned in one of my previous blogs, this should be one of the first things that you organise soon after your arrival here in Australia. It’s a pretty quick process. You will need to enter personal information including your passport/ travel document number and contact details.
It’s a pretty complex thing, trying to understand the process of completing and lodging a tax return, specially as a newly arrived migrant in Australia. I know this based on experience. But don’t stress yourself out too much. The ATO has practical advice for first-time taxpayers and if it does get too much, ask the professionals for help, just like I did.
The information written above is a general guide only.
Disclaimer All content and information in this post is for purposes of sharing my experiences only, does not constitute professional advice and does not establish any kind of professional-client relationship.
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