If you are a foreign resident taking up employment in Australia it is strongly recommended that you seek expert advice on your Australian Taxation obligations. Expatriates working here will usually be liable for income tax on their Australian sourced income. This not only includes wages and salaries, but also interest and dividends that have their source within Australia.
Whether you are a resident for Australian income tax law will depend on your circumstances and this needs to be reviewed on a case by case basis.
If you are required to pay Australian income tax, it is important to note that the Australian tax year concludes on 30 June, and you will need to lodge an income tax return by 31 October. If you engage a tax agent or accountant they are eligible for lodgement extensions.
There are also a number of considerations that an expatriate needs to understand when negotiating their employment contract and also to legally minimising their tax. These include (but are not limited to):
- Certain types of benefits can be “salary packaged” and result in significant tax savings. The two most common ones available to expatriates are the living away from home allowance (LAFHA) and motor vehicles. The LAFHA is designed specifically for expatriates to compensate for the additional costs of moving residency and provides for a tax break for food and rent. Motor vehicles can also be packaged and can often result in less tax being paid.
- Expenses incurred in deriving your income can also be claimed. For example depreciation on your notebook, stationery, internet and professional subscriptions can often be claimed and this will in turn reduce your taxable income. It is good practice to retain receipts for all items of expenditure that you would like to claim as a tax deduction. There are harsh penalties if you get it wrong.
- There are also a number of tax offsets or rebates that can be claimed to help reduce your tax. You will need to consult a tax expert to assist you with their eligibility.
- Australia also has a compulsory superannuation system, whereby your employer is required to contribute a percentage of your income into an Australian registered superannuation fund. There are some limited exemptions to this for expatriates, but if you find your employer making these contributions you can claim these back if you were to permanently leave Australia.