The Australian Tax System
Australia has an incredibly high taxation system - a fact few people realise before they arrive in Australia.
Tax File Number (TFN)
A TFN is a unique number issued by the Australian Tax Office (ATO) to individuals for identification and record-keeping purposes. Anyone who intends to earn money in Australia, regardless of age and nationality, needs to apply for a TFN. If you do not have a TFN you may have more tax withheld than is necessary when you start earning, so it is advisable to get one as soon as you can after you have settled.
How to Apply for a TFN
TFN application forms are available from the ATO or Centrelink offices. You can also phone the tax office between 8am and 6pm, Monday to Friday on 13 28 61 to make an appointment.
What Documents do I need?
If attending the office in person, you will need to provide original documents proving your identity. The TFN application lists the types of documents accepted by the ATO. You should receive your TFN within four weeks of your application.
You can also now apply online for your TFN, which may be more convenient as no identification documents will be required. You can apply via their website at www.ato.gov.au
Select 'For individuals' then go to 'Online individual tax file number (TFN) registration'.
When you Start Working
Your new employer will ask you for your TFN so that their payroll can determine how much tax to take out of your payment. It is to your advantage to have one already in place as providing this information should prevent you from being charged the maximum rate (currently 48.5% plus a Medicare levy). However, you will have 28 days from the day you start work to give your TFN to your employer before tax is deducted at the maximum rate.
Residency (for tax purposes)
Generally, the ATO considers you to be an Australian resident for tax purposes if:
- You have always lived in Australia or you have come to Australia to live.
- You have been in Australia for more than half of the income year (unless your usual home is overseas and you do not intend to live in Australia - for example, you are a working holidaymaker).
- Or you are an overseas student enrolled in a course of study for more than six months' duration.
Therefore the majority of you will be considered by the tax office as an Australian Resident for tax purposes with the exception of those holding Working Holiday Visas. It is worth noting that the measures that the ATO uses to determine your residency status are not the same as those used by the Department of Immigration and Multicultural and Indigenous Affairs (DIMIA).
For current tax rates refer to www.ato.gov.au/individuals
Tax Returns
As previously mentioned, most working holidaymakers are tourists or travellers visiting Australia and are not Australian residents for tax purposes. However, anyone who has been paid a salary or wages in Australia is encouraged to lodge an income tax return.
The Australian tax year ends on 30 June. You should lodge your tax return by 31 October, unless you have been granted an extension to lodge until a later date. You will have to pay more tax if you didn't pay enough while you were working. If too much tax was withheld from your pay, you will get a refund.
