More than 570,000 backpackers traveled through Australia in 2009, many of them on working holiday visas (WHV) to cover expenses. Taxes are the last thing backpackers think about when they’re in Australia; that is, until it’s time to leave or file their tax returns….
Having come to Australia on a WHV a few years ago, I know firsthand how difficult it is to understand a new tax system, especially when it is clouded by myths, hearsay and misleading information. For many backpackers, this is their first experience with taxes and perhaps their first job, which makes matters worse!
In this article, I try to dispel some myths and clarify some questions about taxes in Australia for WHV holders. Tax Return Agent in Melton
As a backpacker/WHV, you don’t have to pay taxes in Australia.
“The only two certainties in life are death and taxes.” – B. Franklin
One of the biggest and most inaccurate things I was told by other backpackers when I arrived in Oz.
Simply put, if you work in Australia, you have to pay taxes on your earnings. The tax rate you pay depends on your individual situation, how much you earned, other income you received, and deductions you are (or are not!) entitled to.
Typically, a person who travels frequently, does casual work and is not considered an Australian resident for tax purposes will pay 29% of all income. This is because the Australian Taxation Office (ATO) assumes that the individual has income in another country, and charges a flat rate on all income to simplify the process.
Tax agents can give you back 100% of your taxes
Taxes are a complex matter, and it can be a good decision to consult a tax agent if you are unsure about any aspect of your tax return. However, any tax advisor who promises to give you back all the tax you paid should be taken with a grain of salt.
They might try to mislead you, or they might lie to the IRS on your behalf – either way, you’ll end up in a lot of trouble. You must always sign a document accepting responsibility for the tax representative’s actions. Accounting and Bookkeeping Services in Australia
If you want to get an estimate of your tax liability or refund due, the ATO offers free calculators you can use.
So how do you get a tax refund?
In some cases, you will receive a refund because you have provided false information to the ATO either directly or indirectly through a tax agent. This is dangerous because Australia has tax evasion prevention agreements with many countries that allow the ATO to pursue individuals even if they return home.
In other cases, individuals are actually entitled to a tax refund. This is particularly the case when an individual has not worked for the full 12 months of the financial year. Some WHV holders are treated as Australian residents for tax purposes. In this case, if they have only worked 3 months of the financial year, they may be entitled to a partial or full tax refund. Again, the ATO offers calculators to help determine this.
Tax is a complex matter – don’t take advice from friends, neighbors or compatriots. Find a registered tax account and avoid those who promise you will get 100% of your taxes back.