Working in Australia

If you are working in Australia there are certain tax issues you need to be aware of.  The first step is to determine if you are an Australian tax resident or non resident.

If you are a non-resident of Australia, you will need to lodge an income tax return if you have income that is taxable in Australia. This excludes any income from which non-resident withholding tax has been deducted (such as bank interest and unfranked dividends). To lodge an Australian tax return you will need to apply for a tax file number.

If you are an Australian resident and you have to lodge a tax return, you need to include your worldwide income in your income tax return. However, if you are able to be classed as a temporary tax resident (sub class of a tax resident) you will not be taxable on your world wide income, however, you will be taxable on your Australian sourced income.

You are a temporary resident if:

• you hold a temporary visa granted under the Migration Act 1958
• you are not an Australian resident within the meaning of the Social Security Act 1991, and
• your spouse (if applicable) is not an Australian resident within the meaning of the Social Security Act 1991.

If you are a resident of Australia for tax purposes and meet the requirements to be a temporary resident, the temporary resident rules mean:

• Most of your foreign income is not taxed in Australia except income earned from employment performed overseas for short periods while you are a temporary resident. This income is subject to income tax and would still be declared in your return for the year in which you earned it. Where you paid tax in a foreign country, you may be entitled to claim a foreign income tax offset when you lodge your tax return.
• If a capital gains tax event occurs on or after 12 December 2006, a temporary resident is not liable to capital gains tax (nor is treated as having made a capital loss) unless the asset is ‘taxable Australian property’.
• Interest you pay to foreign residents (for example, foreign lenders) is not subject to withholding tax.
• Controlled foreign company and foreign investment fund record keeping obligations are partly removed.

Once you determine whether you are a non-resident or tax resident will you be able to determine your liability to Australian income tax. To find out more about tax residency click here.

If you have been transferred to Australia for a fixed term contract, you may be eligible for a living away from home allowance from your employer.  To find out more click here.

Superannuation

If you are working in Australia and your monthly wage is more than AUS $450, your employer will generally contribute an amount equal to 9% of your wage into a superannuation account for you.

Capital Gains Tax

Finally, if you are a tax resident and you decide to move overseas and become a non-resident for Australian tax purpose, you may crystalise a capital gain.  A capital gain or capital loss may occur for each asset owned which is not 'taxable Australian property' where an individual or a company ceases to be a resident of Australia for tax purposes (CGT event I1) or a trust ceases to be a resident trust (CGT event I2).

If you require assistance, please contact us on (02) 8264-0755