Tax & Superannuation

Tax File Number

A Tax File Number (TFN) is the number issued to each taxpayer by the Australian Taxation Office (ATO). Although a TFN is not compulsory it is to your advantage to avoid paying more tax than necessary.

You can apply for a tax file number (TFN) online only if you are currently in Australia and you have:

A valid permanent migrant visa, or

A valid visa with work rights, or

A valid overseas student visa, or

A valid visa allowing you to stay in Australia indefinitely.

To apply online, you need a valid passport or relevant travel documents and you must be authorised to work in Australia by the Department of Immigration and Citizenship (DIAC)

When you apply online you do not have to physically provide proof of identity documents. ATO will compare your personal and travel document details with DIAC’s records. When they validate your details, they will give you a receipt number.

Only one TFN will ever be issued to you. Once you have a TFN, you don’t need to re-apply for one if your circumstances change.

To apply for a Tax File Number online, refer to www.iar.ato.gov.au

Starting a new job

Each time you start a new job you must complete a Tax File Number Declaration. The information you provide in this declaration will help your employer work out how much tax to take out of your wages.

When completing the declaration you must state whether you are ‘an Australian resident for tax purposes’.  The residency tests the ATO use to work out your residency for tax purposes are not the same as those used by other Australian agencies for other purposes such as immigration.

For more information, click on the following link: http://www.ato.gov.au/Calculators-and-tools/Are-you-a-resident/

Generally, you are an Australian resident for tax purposes if any of the following applies:

  • you have always lived in Australia
  • you moved to Australia and live here permanently
  • you have been in Australia continuously for six months or more, and for most of the time you have been in the same job, and living in the same place
  • you have been in Australia for more than half of the financial year, unless

your usual home is overseas, and you do not intend to live in Australia.

People on a working holiday visa often find it confusing to work out which category they fall into. Here are some examples from the ATO website to help you:

You are an Australian resident for tax purposes if you are visiting Australia for more than six months and for most of that time you live at the same place, and you either have or establish ties in the local community.

You are not an Australian resident for tax purposes if you are visiting Australia for more than six months, and for most of that time you are travelling and working in various locations around Australia.

Superannuation

Superannuation is money set aside over your lifetime to provide for your retirement. In Australia your employer will contribute to your Superannuation if you’re between the ages of 18 – 69 years old. These superannuation contributions must be at least 9% of your ordinary earnings. It doesn’t matter if you work full time or part time or causally.

A very useful tool is Superseeker on the ATO website:

On this page you can:

  • Check your current support accounts
  • Find lost super
  • Find ATO- held Super
  • Transfer your Super into the support account that you want.

If you worked in Australia as a temporary resident, you may be eligible to claim back your super money after leaving Australia. This link will guide you.

Obligation to file a tax return

In Australia you must lodge an income tax return at the end of the financial year (June 30th) to ATO. This allows ATO to calculate whether you have paid enough taxes on the wages you earned. If you have paid less than you should, you get a tax bill. If you have paid more taxes than you should, you get a tax refund.

For more information, click on the following link: http://www.workstay.com.au/Tax-information

A payment summary is a statement from the employer outlining the full amount of wages you earned and the amount of tax paid in a financial year. This document is quite essential in lodging your tax return. Employers are legally required to give the payment summary to you within 2 weeks after the end of financial year (by 14th of July) or within 4 weeks since you leave the company. Payment summary must be obtained from each employer you have worked for in that financial year. If you do not have a payment summary you might have to provide other documents like final payslip and statutory declaration

For more information, click on the following link: http://youngworkertoolkit.youth.gov.au/starting-your-job/my-boss-has-told-me-get-abn-and-my-own-workers-compensation-insurance-do-i-need

Medicare Levy Exemption

Medicare is the scheme that gives Australian residents access to health care. To help fund the scheme, most taxpayers pay a Medicare levy of 1.5% of their taxable income. However people from the Republic of Ireland on a temporary visa are not entitled to Medicare benefits. In order to avoid paying the Medicare levy you must obtain a Medicare levy exemption certificate from Medicare Australia. You must send a completed form and certified copies of all the used pages on your passport. More information available here

Working ABN

An ABN is an Australian Business Number, which businesses use when dealing with the Australian Tax Office and other government departments.

If your employer asks you to get an ABN, it is possible that he or she is hiring you as an independent contractor and not as an employee. It’s illegal for an employer to pretend you are a contractor when you are clearly an employee. This is called ‘sham contracting’ and your employer could be prosecuted.

If you are working as an independent contractor, you’ll be responsible for reporting your income and paying tax to the Australian Tax Office. If you are an employee, your employer will usually deduct tax from your income.

Generally contractors use their own tools, have their own insurance and decide how they want to do the job. They may also be responsible for their own superannuation entitlements and workers compensation.

“UP TO 50,000 Australian builders could be missing out on the holidays, sick leave and superannuation they are entitled to, as a result of being improperly employed as contractors instead of permanent staff.”

Read more of the article here

Entitlement to ABN

The ABN entitlement tool will help you in determining whether you are entitled to register for ABN.  When applying for an ABN it is important that the information you provide to the Australian Business Register is true and correct.