Understand more about Australian Taxation for New Migrants
When you become a permanent resident in Australia, one of the questions that always comes in your mind, is about Tax! This article will give you valuable information about Australian tax system.
Firstly, Tax is paid to the Australian Government by the residents of Australia. You will pay tax to the government and in return the government will provide services to your community. The lovely roads, schools, hospitals and many more are provided to you from the government with the tax they receive. The main and most important tax you will pay is Income Tax but there are many other forms of taxation in Australia. Income Tax in Australia is collected by the Federal government and can be paid through the Australian Taxation office.
Goods and Services Tax, also known as (GST) is also collected by the Federal government. Once GST has been collected by the Federal Government it is then paid to the states under a distribution formula which is all determined by the Commonwealth Grants Commission.
Income Tax is charged on the income you receive for example, your salary and wages (personal earnings), business income or investment income (capital gains). If you own a company you will be taxed at a flat rate of 30% where as individual tax payers are taxed at progressive rates. When it comes to Capital gains, you are usually only subject to tax at the time the gain is cleared.
If you are a new tax payer in Australia it is important to know that the financial year for Australia runs from 1 July to 30 June the following year and the Australian Taxation Office collects the Income Tax for the Government of Australia.
Do you know how much income tax you should be paying?
Well, this all depends on how much you earn. You will be charged a higher tax rate the more money you earn. You may calculate your tax on a tax calculator.
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INCOME TAX RATES FOR 2014/2015 – AUSTRALIA |
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|
INCOME |
MARGINAL TAX RATE |
TAX PAYABLE |
|
$0 – 18,200 |
0% |
NIL |
|
$18,201 – $37,000 |
19% |
19 cents for each $1 over $18,200 |
|
$37,001 – $80,000 |
32.5% |
$3,572 plus 32.5 cents for each dollar over $37,000 |
|
$80,001 – $180,000 |
37% |
$17,547 plus 37 cents for each dollar over $80,000 |
|
$180,001 – and above |
47% |
$54,547 plus 47 cents for each dollar over $180,000 |
If you are an Australian resident you may have heard of the ‘tax free threshold’. The ‘tax free threshold’ only applies to residents of Australia and this means that the first $18,200 you earn will be tax-free. In order to qualify for the $18,200 tax-free threshold you will need to complete a ‘Tax file number declaration’ (TFN) before you start work or start receiving payments from a government agency.
Unfortunately this is not the same for foreign residents. If you are a foreign resident in Australia you will pay tax from the very first dollar of your taxable income. Therefore foreign residents (temporary residents) are usually only taxed on their income sourced in Australia.
How do you determine if you are a foreign resident or Australian resident?
If you have come to Australia to live or if you have been in Australia for more than half of the income tax year the Government of Australia will classify you as an Australia resident for tax purposes only. You should also know that if you are an International student in Australia and your study/course is more than six months you will also be classified as an Australian resident for tax purposes. If you are in Australia and you do not intend to live in Australia and your usually residence is overseas such as vacationers/travelers you will also be considered an Australian resident for tax purposes only.
How do I go about applying for Tax?
Whether you are a company or an individual you are fully responsible for providing the correct information to the Taxation office and the Government of Australia. You will be required to lodge an annual tax return at the end of each income year (30 June). This will show the Taxation office how much income you have received or paid and you may claim any deductions or offsets you are entitled to.
Below are the links which will help you to understand more about the Australian tax system:
Tax returns | australia.gov.au
http://www.australia.gov.au/topics/economy-money-and-tax/tax
ONEderland Consulting is a registered migration agent here in Western Australia. We can also give some information about Australian tax system. If you would like to know more about Australian visas, eligibility of a Permanent Resident and how you can pay your tax, please contact our office on (+61) 089477-5831 or email: [email protected]
