Am I taxed differently than Australian residents?

Yes, you are if you lodge as a nonresident.

As a nonresident, from July of 2012, you are subject to tax on 32 1/2 cents or roughly a third of every dollar you earn. This goes up to $80,000.

In addition, you cannot take advantage of the tax-free threshold of $18,200. Australian residents pay no tax on the first year of their income up to $18,200, and you are not eligible for any of the tax offsets Australians benefit from.

However, unlike Australian residents, you do not pay the Medicare levy and are not subject to tax on any foreign income you may receive while in Australia.

What Australian income must I pay tax on?

As a non-resident, you must pay tax on all the salary and wage income you earn during your stay in Australia.

The tax owed will most likely have been withheld by your employer. If too much tax was withheld the excess payment will be returned to you for a refund.

You should also expect to pay tax on any allowances or tips you received at work.

You will also pay a 10% tax on the interest you earn from an Australian bank account and a tax on unfranked dividends, if any, of about 30% depending on the circumstances.

Neither interest nor dividends are assessable income, and therefore do not necessitate lodging a tax return. These taxes are withheld instead.

You must make sure to alert the bank paying you interest and the Australian company paying you dividends of your permanent overseas address. If you do not, you will have to pay tax at the higher rate of 45%, instead of 10%, on the income earned.

How much will it cost to file a nonresident tax return using E-Lodge?

Nonresidents filing an Australian tax return during tax season do so at the same rate as Australian residents.

Given that many working holidays, makers will only report one or at most two types of incomes earned during their stay in Australia, most should be able to lodge using the Basic Package priced at $34.95.

A few claiming tax deductions in excess of $300 will have to use the Premier Package priced at $49.95.

What happens if my residency status changes halfway through the financial year?

Resident

Once you leave Australia permanently, you change residency status and cease to be a resident for tax purposes on the date of your departure. Before that date, you will be liable for tax on your worldwide income. After that date, you will be liable only for your Australian-sourced income. The situation is reversed for those returning to Australia permanently. Continue reading “What happens if my residency status changes halfway through the financial year?”