Been working in Australia and need to claim your tax back? Here we give you a few tips on how to maximise your Australian tax refund.
Considering that tax is one of the two things that are certain in life, you should find ways to claim back as much of it as you can. Yes, despite the many changes in the Australian taxation system, there are sure-fire ways to maximise your tax refund.
Get your TFN
Your tax file number (TFN) will help ensure that your employer will deduct the correct taxes from your income. You’re also going to need it when you apply for your tax refund. So make sure that you get one when you start working in Australia.
If you are self-employed, you need an Australian Business Number (ABN) instead. Since tax is not taken at source, similar to that of an employee, you need to retain a portion of your income to meet the liability that will arise at the end of the tax year.
Know if the tax-free threshold applies to you
If your yearly income is up to $18,200, you don’t need to pay tax as it is still within the tax-free threshold. You only start paying taxes if your income is over the said amount. This rule, however, only applies to Australian residents. If you stay over 130 days in the country, you become a resident for tax purposes, making you eligible for the tax-free threshold.
If you are a non-resident for tax purposes, however, you need to pay 32.5c on every dollar from the first one you earned.
Working holidaymakers, on the other hand, can take advantage of the so-called Backpacker tax where they only need to pay 15c on every dollar from the first one they earned.
Claim on work-related expenses
To reduce your tax liability, see if there are work-related expenses that you can claim back tax from, such as RCG, RSA, and white cards that you paid for yourself. Most items you use for work and paid out of pocket may be eligible for a tax claim, provided that they meet certain criteria:
• You paid for the equipment or tools yourself, without reimbursement
• You bought it for your job
• You have a recorder or proof of your purchase
Make sure to keep all receipts for work-related expenses, so you can claim back tax where possible since there are some exceptions.
Claim back from Medicare Levy
The Medicare Levy is an Australian healthcare scheme that may be available for certain nationalities that qualify, such as Britons and Italians. You’re exempted from paying the levy if you failed to meet the scheme’s eligibility requirements. However, it has been known to happen that the levy is deducted from the wages, whether it is applicable or not. If this happens to you, you can apply for a refund.
Start by applying for an exemption certificate, which is applicable if you earn more than $20,542 in the financial year. Along with your tax return application, you also need to submit a separate Medicare Entitlement Statement.
You can also get a tax refund from your superannuation if you leave Australia, so you should look into it as well. And make sure to file your tax return on time to avoid penalties. The amount you pay could have been added to your claim back tax.
Find out how to claim back tax from Australia