How does the Australian tax system work and who is required to file a tax return in Australia?
Anyone who wants to work in Australia must have a tax number or TFN (Tax File Number). A TFN can only be applied for once you arrive in Australia, through the online tax office. The tax number will be delivered to the applicant by post within 28 days of the application being processed. Work activity can commence as soon as the TFN application is submitted. However, the employer must be informed of the submission of this application. The employer will then provide the employee with a form to complete, or a 'Tax File Number Declaration', in which the employee will also provide the TFN number.
Income tax must be paid by anyone who has worked overseas. Australian income tax rates are as follows:
|0 - $18,200||0%||nil|
|$18,201 – $45,000||19%||19 cents for each $1 over $18,200|
|$45,001 – $120,000||32.5%||$5,092 plus 32.5 cents for each $1 over $45,000|
|$120,001 – $180,000||37%||$29,467 plus 37 cents for each $1 over $120,000|
|$180,001 and over||45%||$51,667 plus 45 cents for each $1 over $180,000|
In Australia, there are several distinct tax residency categories. Ensuring you declare your income per the correct category rules is vital, you may pay thousands in extra tax if you get it wrong. The tax resident categories are:
A tax return for the 2021-2022 financial year is required to be filed by every Australian resident who earned income exceeding $18,200 in that tax year. By filing a tax return, it is possible to reclaim some of the tax paid. Ways to file a tax return:
An online calculator can be used to get an estimate of your tax refund.
The Australian tax year begins on 1 July and ends on 30 June of the following year. This is a 12 month period used for tax purposes. The 2021-2022 tax year runs from 1 July 2021 to 30 June 2022.
The tax return for the 2021-2022 tax year can be filed from 1 July 2022 to 31 October 2022.
The taxpayer is required to file a tax return no later than 4 months after the end of the Australian tax year.
If the tax return is filed late, on or after 31 October, the tax authority may impose a penalty of:
|Number of days after the due date for filing the return||Amount of penalty|
|1 - 28 days late||$222|
|28 - 56 days after the due date||$444|
|57 - 84 days after the due date||$666|
|85 - 112 days past due||$888|
|113 days or more||$1,110|
Need help with your Australian taxes? Take advantage of our consultation with a tax expert.