Australian income tax

annemar23

Hoping someone in a similar position can help. I have been in Australia a few months, working a couple of weeks at this stage. Just wondering if the tax I will have paid up to the 30th June can be reclaimed?
I know I will have to submit the income tax return but I am wondering if the system is similar to Ireland where you have tax free credits for the year and if you only work part of the year you can claim back tax paid in excess of your tax free credits? I am on a permanent residency visa.
Thanks

rightyabe

annemar23 wrote: »

Hoping someone in a similar position can help. I have been in Australia a few months, working a couple of weeks at this stage. Just wondering if the tax I will have paid up to the 30th June can be reclaimed?
I know I will have to submit the income tax return but I am wondering if the system is similar to Ireland where you have tax free credits for the year and if you only work part of the year you can claim back tax paid in excess of your tax free credits? I am on a permanent residency visa.
Thanks

AFAIK you pay no tax on your first $17,000. Could be way wrong but it changed this year, it was $6,000 but I read somewhere it increased to 17k. Again I could be way wrong.

Legend100

Australia works on a tax free allowance system rather than a tax credits system as at home.

If you are resident for tax purposes in 2013, you get a tax free allowance of 18,200 with tax bands of 37k, 80k & 180k

The way payroll works over here is that you get a weekly/fortnightly/monthly tax free allowance depending on the way you get paid. You are taxed kind of like on a week 1 basis at home if you know what that is. You basically pay tax on your weekly/fortnightly/monthly income over the tax threshold for that particular period.

So if you start a job later in the year, you should always be due some sort of refund as your unused threshold from the weeks you didnt work will be available. Not quite as fair a system as at home (in that you give the ATO an interest free loan for a period over the year but on the flip side, the effective rate is slightly lower provided you are not on the 180k band)

There is also a low income offset that will increase your possibility of a refund but it is a bit technical to explain

I work in tax btw....great fun as you can imagine

annemar23

Thanks! That was the info I was looking for and ultimately the answer I wanted too, I can get some money back!

danotroy

so basically does this mean that if i earn $17999 i get a refund on all the tax that was withheld from me during the year? but if i earn $18000 they keep all my tax?

Legend100

no the 18200 is the tax free threshold - anything above this is taxed

Again this is assuming you are resident for tax purposes

danotroy

okay so i am a resident for tax purposes. i have earned over 18200 in this tax year. i have paid approx 5,000 in tax this year how much of this will i get back?

Legend100

since i don't know your gross income I can't say for sure but if I take an example of 40k

Then your tax liability is
First 18,200 0
Next 21,800 (40-18.2) 4,142

Tax paid (5,000)
Refund due 858

This is a very basic example as it ignores medicare levy (OP was PR so medicare levy would be payable) and also ignores the low income tax offset which at 40k you would be getting about another $400 back

danotroy

Legend100 wrote: »

since i don't know your gross income I can't say for sure but if I take an example of 40k

Then your tax liability is
First 18,200 0
Next 21,800 (40-18.2) 4,142

Tax paid (5,000)
Refund due 858

This is a very basic example as it ignores medicare levy (OP was PR so medicare levy would be payable) and also ignores the low income tax offset which at 40k you would be getting about another $400 back

Thank you.

I think my salary so far is about 40k. so basically if i had only worked for 3 months and earnerd $18,199 i would get a huge refund at the end as they take a tax based on weekly income?

Legend100

yeah that is it exactly (but you must be resident for tax purposes as if someone is not, they have no tax free threshold)

Legend100

danotroy wrote: »

Thank you.

I think my salary so far is about 40k. so basically if i had only worked for 3 months and earnerd $18,199 i would get a huge refund at the end as they take a tax based on weekly income?

Oh and in your example above, if you earned 20.2k for example in those three months- you still would get most of your tax back, you just pay it on the 2k over the threshold

danotroy

Legend100 wrote: »

Oh and in your example above, if you earned 20.2k for example in those three months- you still would get most of your tax back, you just pay it on the 2k over the threshold

thank you!

I got about 4,000 back last year! i thought as i worked more this year i would get more back! not to be silly me!