Tax In Australia

A Contractor's Guide to Taxes : 

One of the most consistently challenging aspects of contracting in Australia is complying with the country’s tax system. As well as paying tax in Australia, you might also still be eligible to pay some tax in your home country, and understanding the legislation behind this can be a challenge.

How do I calculate my taxable income: 

If you’re working in Australia under a permanent contract, many employers will handle your tax under the PAYE (pay-as-you-earn) system. This means that they calculate and process your taxes in Australia for you and then send you a net wage. Your income tax, public health insurance, social security and other deductions will all be covered by this payment. This is the easiest way to handle your income tax in Australia, but contractors may not be offered this service because of their short stay with each employer.

Anybody who can’t pay their tax in Australia through PAYE is left with the prospect doing everything themselves.

Do you know much about Australian Tax Law? Does Australia have a tax treaty with your home country? You will need to find out or find someone who can help! Income tax in Australia can range from 0 to 45 percent, and you need to be sure you are placed in the correct tax brackets.

Tax Calculator: 

If you are a contractor and want a calculation on your tax and net retention in Australia, we can supply it to you free of charge.

Using an Umbrella Company for Income Tax : 

Contractors in Australia are faced with masses of paperwork and numerous wasted hours filing a tax return unless they find an alternative option. An Australian umbrella company can act as your employer during your stay in the country whilst still allowing you the freedom of a contractor. The only difference is that you submit your timesheets to them; they’ll calculate and pay your taxes as you earn, and then you receive a net wage (as well as documentation for your records).

The companies are experts in Australian taxation, and they’ll ensure that you keep the largest proportion of your earnings whilst complying with local laws. They can deal with any issues with the Australian tax office or tax department directly including processing your tax refund if you are eligible.

How We Can Help You with Tax: 

We work with numerous umbrella companies in Australia, many of whom are experts in tax and immigration laws. If you have any questions about tax in Australia, we’ll get the answers from them directly so you can rest assured you’ll be getting accurate information. We have comprehensive knowledge of the different services they provide, and can help you find the right company to handle your income tax. We help oil and gas workers, software developers, IT project managers, testers, business analysts and telecommunications contractors get tax efficient payments and sponsorship for their Australian work permit.

Our advice is 100 percent free, and comes with no obligations. You will be paying taxes in Australia but without the overhead of directly dealing with the Australian tax authorities. Get in touch with us today for some reliable advice on tax in Australia!

 

When Do You Need to Lodge Your Tax Return?: 
1 July – 31 October
Tax Filing Deadline : 
31 October
Can you file it online? : 
Yes, https://my.gov.au/LoginServices/main/login?execution=e1s1
Currency: 
Australian Dollar (AUD)
Tax-free Threshold in: 
AUD18,200
Grossed Income: 
Residents
Grossed Income: 
0-18,200
Tax Rate: 
0%
Grossed Income: 
>18,200-37,000
Tax Rate: 
19%
Grossed Income: 
>37,000-87,000
Tax Rate: 
32.5%
Grossed Income: 
>87,000-180,000
Tax Rate: 
37%
Grossed Income: 
>180,000
Tax Rate: 
45%
Grossed Income: 
Non-Residents
Grossed Income: 
0-87,000
Tax Rate: 
32.5%
Grossed Income: 
>87,000-180,000
Tax Rate: 
37%
Grossed Income: 
>180,000
Tax Rate: 
45%
How long does it take to set up: 
3 days
How much does it cost: 
AUD469
Is it easy? : 
Starting a Business Rank: 7/190 (Source: World Bank)
How to File Taxes in: 

Step 1: Have your Tax File Number (TFN) Ready

If you have not yet applied for a TFN, you can find out how on the Australian Tax Office (ATO) website here.

Step 2: Create a myGov Account

If this is your first time filing a tax return, you are required to create a myGov account. You can do so here.

Step 3: Link Your myGov Account to the ATO

Call the ATO on 13 28 61 and enter your TFN and date of birth when requested. Select 1 at the prompt to get your unique linking code. The code expires after 24 hours. Sign into myGov, select ‘Services’ from the navigation bar, and select ‘Australian Tax Office’ under ‘Link a service’. Select ‘I have a linking code’ and following the instructions as prompted.

Step 4: Access myTax

You can access myTax by logging into your myGov account here. Click ‘Australian Taxation Office’ under ‘Your services’ on the home page.

Step 5: Enter the Relevant Information

Within myTax, you will be asked to:

  1. Confirm your contact and financial institution details; and
  2. Answer a series of tick-box questions regarding income, investments, government payments and deductions.

Some of the information above may already be selected or filled in based on information provided to the ATO by your employer, banks, private health insurance fund or other government agencies (e.g. Centrelink). It is recommended that you file taxes in early August because this is when the ATO typically receives this information.

MyTax will generate a tax return once you have answered all the relevant questions. You can use the Add/Edit buttons to add or edit pre-filled information.

Step 6: Lodge Taxes

Before you lodge your taxes, myTax will estimate your refund or amount owing. Confirm your bank account details, check that the information you are declaring is correct, and click ‘Lodge’.

Notes: 

Rates for Residents and Non-Residents: Different employment income rates apply to residents and non-residents (specified in the table above).

Medicare Levy: A Medicare levy of 2% applies to most residents. An additional Medicare levy surcharge of between 1 - 1.5% applies to higher income tax payers who are not covered by health insurance for private patient hospital cover.

Working Holiday Makers: Special tax rates apply to working holiday makers i.e. individuals holding a temporary working holiday visa or a work and holiday visa in Australia. The first AUD37,000 of income (from all sources) is taxed at 15% with the balance taxed at ordinary rates.

Does the 183 day rule apply in: 

Yes

When do you become a tax resident in: 

You become a tax resident in Australia when:

  • You have a contract of employment in Australia and you are in the country for more than 6 months;
  • Your domicile is in Australia (unless you have a permanent place of abode outside Australia);
  • You have been in Australia for at least 183 days in the income year (unless your usual place of abode is outside Australia and you do not intend to reside in Australia); or
  • You are an ‘eligible employee’ under superannuation legislation for Federal public servants.

You become a temporary resident when:

  • You have been granted a temporary visa under the Migration Act 1958;
  • You are not an Australian resident within the meaning of the Social Security Act 1991; and

You do not have an Australian spouse within the meaning of the Social Security Act 1991.

Am I taxed on my global income in: 

Residents are taxed on their worldwide employment income. Non-residents are taxed on their Australia-sourced employment income only.

Client comment

"Great advice and excellent service on contracting and immigration solutions in the UK. I would highly recommend Tim and the team to assist you with accurate, clear and concise contracting advice in the UK or any other country for that matter."

Prishen Pillay,Global DBA Operations Lead

Shell International Trading & Shipping