DATES. The Australian financial year goes from the 1st July to the 30th June. The dates to apply for the tax return are the 1st July to the 31st October. If you don’t do it between these periods, you risk getting a fine.
TFN is the Tax File Number, it’s personal and for life (even if you leave the country for a while and you come back), used for tax and superannuation purposes. Link to apply for a TFN: www.ato.gov.au/Individuals/Tax-file-number
ABN is the Australian Business Number, used for those who are running their own business; the different kinds of businesses are Sole Trader (yourself, the most common one), Partnership (you have one partner or more), Company or Trust. Link to set up an ABN: https://abr.gov.au
ATO is the Australian Tax Office, the department in charge with taxes. Link: www.ato.gov.au
How to do the declaration of my taxes?
You have to fill in a form with all the information, and once the ATO has checked your case they’re going to give you money back (deposit into account), or instead they’ll ask you to pay taxes.
The documents you’ll need are: a copy of your visa, a copy of your passport (the page of your details and one with the stamp of the day of entry into Australia), the TFN and the payment summaries of each employer you’ve been working for. If you have worked with your ABN, remember to keep/save all your expenses/tickets during your business activity (as petrol, phone reloads, products, equipment, uniform…).
If you process the application online it’ll take 12 working days; and if you send it by post it’ll take about 42 working days.
How can I know how many taxes am I going to pay?
The income tax rates are progressive, which means the more you earn, the more taxes you’ll have to pay. The thresholds are:
- $0 – $18,200 (nothing owed for tax purposes)
- $18,201 – $37,000 ($0.19 of each $1)
- $37,001 – $80,000 ($3,572 plus $0.325 for each $1 over $37,000)
- $80,001 – $180,000 ($17,547 plus $0.37 for each $1 over $80,000)
- $180,000 and over ($54,547 plus $0.45 for each $1 over $180,000)
If you have a TFN and an ABN you will be taxable of the total income. For example, if you are running your own company and at the same time you’re an employee:
ABN + TFN $18,000
In this case you’re under the threshold nº 1, so you won’t have to pay any taxes to the ATO, instead you’ll get some money back if you have paid any taxes with your TFN.
What happens when you have a second job?
On the TFN declaration form (link: https://www.ato.gov.au/uploadedFiles/Content/MEI/downloads/TFN-declaration-form.pdf) there’s a question “Is the worker claiming the tax-free threshold?”
Here an example with few possibilities depending if you mark “Yes” or “No” in this question.
Bruto year: $20,800
Bruto week: $400
“Is the worker claiming the tax-free threshold?”
√ YES $468 of taxes /year
√ NO $4,992 of taxes /year
Bruto year: $26,000
Bruto week: $500
“Is the worker claiming the tax-free threshold?”
√ YES $1,976 of taxes /year
√ NO $6,812 of taxes /year
END OF FINANCIAL YEAR
As with both jobs you’ve earned $46,800, you’re in the threshold nº3 ($3,572 plus 32,5c for each $1over $37,000); that means you have to pay an amount of $6,756.81 in taxes.
Job 1 “YES” and Job 2 “NO”
$468 + $6,812 = $7,280
You’ll get a tax return of $523.19
Job 1 “NO” and Job 2 “YES”
$4,992 + $1,976 = $6,968
You’ll get a tax return of $211.19
Job 1 “NO” and Job 2 “NO”
$4,992 + $6,812 = $11,960
You’ll get a tax return of $5,203.19
Job 1 “YES” and Job 2 “YES”
$468 + $1,976 = $2,444
You’ll have to pay to the ATO $4,312.81
In the cases where you have a second job it’s 100% recommendable to get in touch with a professional accountant, as they’re able to advise you to make the best decision about which job you can consider as first or second regarding the taxes payment.
If you want to have an estimate of your tax situation, you can download the ATO Tax Calculator App
What if an employer asks me to get my own ABN?
Lately the Government has been chasing some companies, most of them belonging to the cleaning sector, asking to the workers to get an ABN so the company takes advantage by paying less to them as well as saving money from their workers taxes. If you’re in a situation where the company is providing you the uniform, the material (as products or equipment) and your work is being supervised, then you should rather be an employee than a sole trader. Always keep in mind if you’re working with your ABN, at the end of the financial year you’ll have to pay taxes of the amount you’ve been earning in your wages.
Another common case could be if a company is asking you to have an ABN partnership, but the reality is that they’re treating you as an employee, because they’re not sharing with you all the information of the company neither the responsibilities of what a partnership supposes.
What if I am on a Working Holiday visa?
From January 2017 the Working Holidays visa holders could be considered as non-residents for tax purposes. That means that the thresholds we’ve explained before won’t work for this kind of visa, and instead you’ll have to pay $0.32 from the first dollar earned.
Keep in mind that if you earned more than $21,300 during the financial year, 2% medicare will be charge. If you’re not in a permanent visa you shouldn’t be paying Medicare, as you aren’t entitled to this service. To avoid paying this levy you can fill out the following form Application for a Medicare Entitlement Statement. If you apply for the medicare exemption statement online (send e-mail to MES@humanservices.gov.au) it’ll take around 28 days. But if you do it with an accountant the process will be much quicker.
Cope accountants have created an online tax return platform. It is available in Spanish, English and Portuguese. The tax return price is only $79. If you did come to our tax workshop event last week you’ll have received a promotional code in order to get a discount.
It’s important to make your taxes with a registered tax accountant because they know the best way to get their money back.
If you have any questions please send an e-mail to Sebastian@copeaccountants.com.au