Every salaried person knows that a portion of the salary goes into withholding taxes before it arrives at one’s bank account. It is the same with the Australian taxation system as well. The below information will be helpful if you are new to Australia and all you want to know about taxes to be paid.
You may have come to Australia to reside permanently or on a work visa. If you earn money here, you will have to pay taxes and file your tax returns accordingly.
Working in Australia
To work in Australia, you will need a work visa which will allow you to work here. You must have a tax file number which will make it easy for you to work, pay taxes and file tax returns. It is mandatory to apply for tax file number before you start working here. In fact, you can apply online after you have got your work visa or you have already stepped foot in the country. Here, it is necessary to understand that if you don’t get a tax file number, you may end up paying more in taxes. Since getting one does not cost anything, get it as soon as possible.
Deduction of taxes
Your employer will deduct tax as withholding tax from your salary. This unique system is known as PAYG or Pay As You Go. Basically, its mandatory for every employer to hold some part of the employee’s salary as per the ATO guidelines.
Australia has a retirement savings system which makes employers pay superannuation contributions for employees into a fund. It does not really matter whether you are working casually, on a part-time basis or full-time. Your employer needs to be paying 9.5% of gross wages as long as you are more than 18 years old and earn more than $450 before tax in one calendar month. If you are not 18 yet but you are working for more than 30 hours a week and make more than $450 in a calendar month, the employer must pay 9.5% of the gross salary into the employee’s super fund. However, if you perform work that is more domestic or private in nature, such as a nanny, your employer only needs to pay if employee worked more than 30 hours a week.
Get the tax information you need ASAP
In Australia, the financial year starts on 1st July and ends on 30th June. Employers send their employees a PAYG summary by the middle of July via email or post, whichever is preferable. This includes permanent, full-time employees as well as those who have worked as a casual or even on a part-time basis. The deductions allowances and entitlements are listed on every payslip and PAYG summary. One thing to understand about the Australian taxation system that the tax you pay depends on how much you earn per pay cycle. This means that the more you earn, the higher the taxes you will end up paying. It is not uncommon to find new comers to the country amazed in the beginning about this!
Filling out the tax file number form
If you are a new migrant and this is the first time you will be filling out this form, you can expect to be boring and tedious! However, it is necessary to do this perfectly and truthfully if you want to get tax return benefits. It is a lengthy form no doubt, and some questions can be tricky. It is best to ask a fellow taxpayer or take help from the Australian Taxation Office if you are not sure about how to answer some of the questions.
Leaving Australia before tax season
It is possible that you may have to leave the country before the financial year ends. You can still file your tax returns by getting the last payslip after you stopped working from your employer and then lodging your tax return before you leave for good. It will take a longer period as compared a normal tax return as it is done manually and ATO will verify it with the employer and match data before releasing any tax refund.