How to Lodge your Australian Tax Return as an Expat
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If you earn any income in Australia, you must lodge a tax return. Most Australians never see their pre-tax income; employers pay income tax for you. However, you need to lodge an income tax return if you earn additional income, such as through investment property.
Many expats still earn Australian income and must pay tax. So, how do you lodge a tax return as an Aussie expat?
Do I Need to File a Tax Return?
Most Australians need to lodge a tax return at some point in their lives. According to the Australian Taxation Office, the only reasons you don’t need to complete a tax return are:
- You earn less than the tax-free threshold as an Australian tax resident
- You’re a foreign resident and didn’t earn any Australian income
- You’re a working holidaymaker, earning less than $45,001
Otherwise, you will need to file a tax return detailing all your Australia-based income (and worldwide income if you’re a tax resident).
Requirements to Lodge a Tax Return
It’s relatively straightforward to lodge returns, whether you’re in Australia or overseas. You will need a unique tax file number. The Australian Tax Office assigns all Aussie taxpayers a TFN. If you have never paid tax in Australia before, you will need to apply for one through the Australian Taxation Office.
You will also need a MyGov account. You may need to update the settings to allow you to complete your tax return from overseas. You can submit your tax return online through myTax, the fastest and easiest way to pay tax.
You will also need:
- Your bank account details
- Proof of net taxable income
- Proof of expenses and deductions
- Evidence of private health funds (if you’re required to pay the Medicare Levy Surcharge)
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How Do You Do Your Tax Return?
Lodging your tax return is easy. Follow our step by step process to complete your own tax return. Or you can go through a registered tax agent.
Step One: What Are the Tax Return Requirements for Your Business Type?
Different businesses have different requirements for their tax returns. When you lodge your tax return, ensure you know the rules for your business structure.
- Sole traders: You must complete an individual tax return, including your business income and work-related expenses. Property investors count as sole traders.
- Partnership: Each partner must report their share of the partnership income in a separate tax return with its tax file number.
- Company: A company is a separate legal entity from the business owner, unlike a sole trader who is the business. You must lodge an individual company tax return to your personal return.
Not-for-profit companies might qualify for some tax concessions.
Step Two: What About Business Activity Statements (BAS) Requirements?
When you apply for an Australian Business Number (ABN) and GST, the Australian Taxation Office will send you a Business Activity Statement (BAS) when you need to complete your tax return. BAS only applies to businesses in Australia – if you have just one investment property, you won’t have any BAS requirements.
BAS allows companies to report and pay certain taxes, such as goods and services tax (GST).
Step Three: Determine the Deadline
Unless you’re using a registered tax agent, the tax return deadline is 31st October. If 31st October falls on a weekend, the deadline is the next business day. The financial year runs from 1st July 2021 to 30th June 2022, so you can begin preparing your tax return from late July onwards. Make sure you detail everything that happened in the previous year.
If you are working with a registered tax agent, they will inform you when they plan to submit your tax return. Tax agents often have special lodgment schedules.
BAS due dates are different – they might be quarterly or monthly.
Step Four: Lodge Your Tax Return
Depending on how complex your finances are, you can complete your tax return yourself or go through a registered tax agent. If you choose to lodge your tax return yourself, you can save time using the MyGov online services. You may need to update your settings to allow you to register your tax return from overseas.
Your tax return should include all your assessable income for that financial year. This might be
- Salary or wages
- Tips, gratuities, or other money for a service
- Work-related allowances
- Interest from Australian bank accounts
- Australian dividends and other investment income
- Bonuses and overtime
- Pension income or super fund
As an expat you need to declare that you’re a non-resident for tax purposes.
You should also deduct any work-related expenses. For example, property management fees, interest on your home loan, and tenant advertising costs can all be deducted.
If you sell an Australian asset during the financial year, you have to add the capital gains to your tax return. Say you sell a house. Only Australian residents for tax purposes get the CGT main residence exemption. You must add the entire capital gain to your tax return. Use deductions to minimise the tax payable.
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Step Five: Pay Your Taxes
Once you have completed your tax return, the Australian Taxation Office will assess the information provided. They might ask for additional information. However, most get responses very quickly. Online services take about two weeks to process. Paper tax returns might take up to 10 weeks.
Payment is due by 21st November for everyone – it doesn’t matter when you lodge your tax return.
Are Expat Tax Returns Different?
It largely depends on whether you’re an Australian resident for tax purposes. Most expats are not Australian tax residents. However, double-check with ATO as your residency status can significantly affect your income tax returns.
Australian residents must declare all income earned worldwide. So, if you live abroad, it’s likely you have foreign income. Australia has tax treaties with many other countries to avoid double taxation. If this is the case, you’ll get a tax refund from one of your tax payments.
Non-residents only need to declare Australian sourced income. However, there is no tax-free threshold for non-residents. You must report your residency status on your tax return.
Will I Get a Tax Refund?
To increase your tax refund, make sure you claim all deductions possible. Keep a receipt for all expenses throughout the financial year. Here are all deductions you should claim on your investment property:
- Land tax
- Stamp duty
- Advertising expenses
- Strata fees
- Council rates
- Upkeep and maintenance (including garden)
- Repairs
- Property related legal costs
- Insurance costs
- Pest control costs
- Property depreciation
- Asset depreciation
- Negative gearing
- Home loan interest
What Happens if You Don't File Your Tax Return?
Pay attention to the deadlines for your income tax return – if you’re late or don’t lodge it, you may face severe consequences. Such as:
- Penalty fee
- Referral to an external collection agency
- Final notice
- Default assessment, including further penalties
- Auditing
- Retaining refunds until you have paid (e.g. withheld capital gains payments)
- Prosecuting you
What Happens if I Make a Mistake on My Tax Return?
Make sure you double-check all the relevant information on your income tax return. While ATO promises to treat genuine mistakes with empathy, there’s no guarantee that you will get away lightly. The Australian Taxation Office won’t hesitate to apply penalties to anyone, including deliberately misleading information.
If you notice a mistake, contact ATO immediately to ensure it’s fixed.
Tax Rates for Foreign Residents 2021 - 2022
Foreign residents, such as expats, must pay different tax rates. Fortunately, ATO will calculate the exact amount you need to pay. However, it’s a good idea to work out the rough amount of tax you’ll pay to create a budget.
- 0 – $120,000 taxable income: 32.5%
- $120,000 – $180,000 taxable income: 37%
- Over $180,000 taxable income: 45%
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Bottom Line
Filing a tax return as an expat is not too different from doing it as a permanent resident of Australia. Make sure you have your tax file number, MyGov login, and evidence of all your expenses ready. If you’re doubtful about doing it, speak to a registered tax agent before paying your taxes.
Remember to check your tax residency status – non-residents only need to declare Australian income. Tax residents must report all income, including overseas earnings.
Frequently Asked Questions
What Is the Deadline for Tax Return in Australia?
Most Australians must lodge their tax return by 31st October, or if it falls on a weekend, it’s the next business day. The financial year runs from 1st July to the 30th June. You have between July and October to organise your return and submit it using the government agencies’ online services. The deadline to pay tax is 21st November.
When Can I Do My Tax Return 2022?
It’s a good idea to record all your taxable income and expenses throughout the financial year. That way, when you complete your tax return, it’s easier to organise your deductions. You can lodge your tax return any time between 1st July and 31st October.
How Much Is the Tax Return in Australia?
The amount of tax you pay depends on your taxable income. Remember to deduct all work-related expenses to increase your tax refund. If you’re a foreign resident for tax purposes, you will have to pay 32.5% on all Australian income between $0 and $120,000.
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