What is the difference between resident and non-resident tax rates?
Non-residents only pay tax on Australian source income. Tax is payable on every dollar of taxable income as declared on their tax
return but a non-resident does not pay the Medicare levy. Residents have to declare all income earned in and out of Australia. A tax free threshold of
,200 is available to them and a resident may be entitled to claim some tax offsets that are not available to non-residents. Depending on their income, a
resident may also have to pay the Medicare levy and Medicare levy surcharge.
I have been in Australia for 12 months on a temporary working visa and have been backpacking around the country picking up a few temporary
jobs to help with expenses. The payment summaries that I have received from my employers show total earnings of about five thousand dollars.
Some employers deducted tax and I have been told that I should get this all back when I put in a tax return.
You will be considered to be a non-resident for tax purposes because you have not settled in any one place and established a home during your stay in Australia. You may not get all your tax back when you lodge a tax return because as a non-resident you do not qualify for the tax-free threshold. This means that you have to pay tax on every dollar of your taxable income. You will not have to pay the Medicare levy though – apply for an exemption certificate from Medicare before lodging your tax return.
I have come to Australia temporarily to fulfill a two year contract with a local company. During the year I took out an
Overseas Visitors Health Policy because I am only eligible for restricted benefits from Medicare. Will I have to pay the Medicare levy surcharge?
You are a temporary resident and, if your income for surcharge purposes is over the relevant threshold amount, you will be liable to pay the Medicare levy surcharge. The policy that you have is not sufficient to provide you with an exemption from the levy.
I have just left school and about to start my first job. I do not have a tax file number; how do I apply for one?
Application forms are available from the Tax Office or you can download a form from the ATO website at www.ato.gov.au (unfortunately you cannot apply online). The completed form must be returned to the ATO together with original proof of identity documents. You can either mail the documents or take them to an ATO shopfront. When your documents have been examined, they will be returned to you and your tax file number will be mailed to you within 28 days. Provided you have applied for a tax file number, you have 28 days to quote your tax file number to your employer after which he is required to withhold tax from your wage at a rate of 46.5%.
When is my employer legally required to issue a PAYG Payment Summary?
Generally employers are required to supply a payment summary within 14 days after the end of the financial year – i.e. 14 July. If an employee ceases employment part-way through the year, one must be supplied within 14 days of receiving a written request from the former employee and the request must not be made any later than 21 days before the end of the financial year. If a former employee has been receiving reportable fringe benefits (RFB) and leaves before the end of March then the 14 day limit may need to be extended.
I’ve had high medical expenses during the year. Can I claim for this on my tax return?
A net medical expenses offset is available where you and your dependants have incurred out-of-pocket medical expenses in excess of ,000. Eligible expenses include doctors’ fees, hospital accommodation and related charges, dental work, medicines, etc. whether paid for in Australia or overseas. Procedures that are of a cosmetic nature only, are not eligible to be included in the calculation of this offset.
I am covered by private health insurance and will be turning 65 this year. Will my premium be reduced?
Taxpayers who take out private health insurance are entitled to claim 30% of the premium as a tax offset. This can be taken as a reduced premium, a cash refund from Medicare or claimed through the tax return at the end of the income year. From 1 April 2005 premiums for health insurance policies covering people over 64 years of age have attracted a higher tax offset. If the eldest person covered by the policy is aged 65 or above the offset increases to 35%. Where the eldest person covered by the policy is 70 years or over the offset increases to 40%.
I have had a large salary increase and am worried that I will now have to pay the Medicare Levy Surcharge. Is there anything I
The Medicare levy surcharge is payable where your income is over a threshold amount and you do not have adequate private hospital insurance. The threshold amount for a single taxpayer is currently ,000 and for families with up to one dependent child it is 8,000. If your income for surcharge purposes exceeds the relevant amount and you do not have private hospital cover, you will pay the surcharge which is calculated at 1% of your income for surcharge purposes.
Income for surcharge purposes is a new income test and includes amounts previously not considered in determining liability to pay the surcharge. It includes your taxable income, exempt foreign employment income, investment losses as well as reportable fringe benefits and reportable superannuation contributions.
I have started a second job. Is there anything that I need to do so that I don’t end up with a tax bill at the end of the
Make sure that you do not claim the tax free threshold of ,200 from more than one employer at a time. It is better to claim it from your main employer. You will pay more tax on the second job but this should ensure that you have paid enough tax on all of your wages for the year.
Do I have to lodge a tax return?
It may be that you don’t need to lodge a tax return. Talk to us to clarify your position.
I am three years behind in lodging my tax returns. Will I get into trouble?
It is important that you lodge your outstanding tax returns as soon as possible, preferably before the Australian Taxation Office takes any action to have you lodge these tax returns. Once they have begun any action, it could result in a court conviction. The ATO may charge a penalty of 0 for every 28 days that the return is outstanding with a maximum penalty of 0. This penalty will be payable even if a refund is due to you. In addition, the ATO will charge interest on any outstanding balance. This interest charge is called a General Interest Charge and may be claimed as a deductible expense.
Can you prepare multiple years returns at the same time?
We are able to prepare and lodge all past years’ returns at the same time. The current year's refunds will be returned in the normal period but there may be slight delays with refunds coming from the ATO for previous years’ returns and possibly may not arrive at the same time.
Can you complete my tax return if I am missing a group certificate?
Your return can be completed using the details from a copy of the PAYG Payment Summary that your employer has provided, a letter from your employer detailing the information on the PAYG Payment Summary or by reviewing your pay slips for that period. If you are unable to obtain the payment summary details from an employer, you will need to complete a Statutory Declaration.
My wife stays home to care for our children. During the year she worked for one week and has received a payment summary showing that she
earned 0 and a small amount of tax was taken out. She has no other income – does she need to lodge a tax return?
Your wife needs to lodge a return even though her income is below the tax free threshold. Any earnings that have had tax withheld are required to be reported on a tax return so that a refund of the tax paid can be claimed.
I received an additional group certificate after I have already lodged my tax return. Can I include it in next year's return?
No you can’t. Income needs to be included in the tax return of the year when the income was earned. You will need to submit an amendment to last year's tax return.
My mother has passed away. Do I need to complete a tax return for her?
If tax returns had been lodged in previous years, you will have to complete a tax return to the date of her death. This return, which will be marked “Final” must show all income received to the date of death.
Is it a good idea to salary sacrifice into superannuation to reduce my tax bill?
All contributions (employer’s and personal) to your superannuation fund up to ,000 per year are taxed at 15%. Once your contributions exceed that, an excess tax of 46.5% of the amount over ,000 is payable by you personally. However, any amounts that are sacrificed into superannuation will now also be taken into account for the new income tests that determine liability to pay the Medicare levy surcharge and the entitlement to claim dependent tax rebates and pensioner tax offsets.
I am turning 55 and have heard that I may not have to pay as much tax?
If you are still working, you may be eligible for a Mature Age Workers Offset if you were born before 1 July 1957. The maximum available offset is 0. You will be entitled to the maximum if your net income from working is between ,000 and ,000 but may still get a reduced amount if your income from working does not exceed ,000. If your only income is from investments, then you will not be entitled to this offset. This offset can only reduce your tax liability to nil; any unused portions cannot be refunded.
Will I get all of my tax back if I only work a few months in the financial year?
No. Your tax deduction is calculated on the income you have earned during the full year. It makes no difference whether you have earned your income working one week or 12 months.
Can I claim any deductions if I have no receipts?
Under some circumstances receipts are not required, but in order to maximise your tax deductions, we recommend you retain all your work and business related receipts.
Can I claim travel for my work?
Home to work and return travel is generally not claimable except in certain circumstances. Travel between jobs on the same day and travel for work (i.e. client meetings, doing pick-ups or deliveries) would be claimable. If you use public transport, keep all receipts and/or diary records. If you use your own car, you need to keep a log book of all business mileage travelled and all expenses of the car including petrol, repairs, registration, insurance and interest on a car loan. The logbook must be kept for 13 continuous weeks and is valid for 5 years unless your circumstances change in the period.
Can I claim my work uniform as a tax deduction?
Deductions for uniforms can only be claimed if the work uniform is specific and identifiable to your organisation (such as chef's checked pants) or protects you from injury whilst you are at work. The cost of a plain uniform or conventional clothing, such as a white shirt and black pants or skirt cannot be claimed, even if your employer tells you to wear them.
What deductions can I claim if I'm studying?
Study expenses that are directly related to your current job may be claimed as a self-education expense. Studies undertaken to find a job cannot be claimed.
How much can I claim if I buy a computer?
If you purchase a computer for use in your work or business, you can claim a percentage of the depreciation that pertains to your work or business use. The depreciation allowed will depend on the expected life of the computer based on the percentage business use.
Can I have your fee taken from my refund?
Yes, we can deduct our fee from the ATO refund and have the net funds deposited directly into your own bank account. An additional administration fee of (including GST) will be charged if this option is taken.