It is the time of year when students have to think about lodging their tax returns.
Whether you are working for an employer or for yourself with an ABN, you will need to lodge a tax return after June 30. Here is some helpful information for you.
If you’re enrolled to study in Australia in a course that lasts for six months or more, you’re generally regarded as an Australian resident for tax purposes. This means:
- You pay tax on your earnings at the same rate as other residents
- You’re entitled to the benefits of the Australian tax system, such as:
- the tax-free threshold ($18,200)
- tax offsets (such as clothes bought for your work)
The Australian financial year runs from 1 July to 30 June the following year. If you entered Australia during the financial year with the intention of staying permanently, your tax-free threshold will be adjusted. Your tax-free threshold will be lower than the full year’s threshold available to most resident taxpayers. Your adjusted tax-free threshold will have two components:
- The first is a flat amount of $13,464
- The second is an additional $4,736, apportioned for the number of months you have been in Australia during the income year, including the month you arrived
Juan Jose became an Australian resident for tax purposes on 17 April this year. This means he has been in Australia for three months in the income year. Juan will not have to pay tax on the first $14,648 of his taxable income for the income year. For any taxable income over $14,648, he will start to pay tax at the rate of 19%. This only happens once – for each subsequent year Juan is studying he will be entitled to the full tax-free threshold.
There is a lot of helpful information on the Australian Taxation Office (ATO) Website.