Expatriate tax ebook - Australia
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Facts and figures
Pre arrival procedures
Employment visas
Tax year
Tax returns and compliance
Income tax rates
Sample income tax calculation
Pre arrival procedures
Foreign assets owned by temporary residents are outside of the Australian tax net. However, should a person arrive in Australia to live their permanently, then foreign owned assets need to be valued at that point in time and that value becomes the deemed acquisition cost for Australian tax purposes.
Employment visas
Expatriates who require a work visa must apply for this before taking up employment in Australia (it can take 6 to 8 weeks for a visa to be granted). It is therefore important that written employment contracts are finalised within sufficient time to submit to the Department of Immigration and Citizenship.
It is important to identify and apply for the correct type of visa.
Businesses are able to sponsor personnel from overseas for a temporary visa valid for up to four years. Minimum remuneration requirements apply. Individuals taking up sponsorship need to demonstrate that:
-
they have the skills which match the vacancy
-
they will be paid in accordance with the company nomination
-
they meet health and character requirements
-
they maintain adequate medical insurance
The expatriate’s spouse may be included on the same visa application.
Certain persons on special types of visas, eg 457, are likely to be classified as ‘temporary resident’ for tax purposes.
Tax returns and compliance
31 October is the due date for filing tax returns. Clients filing through a tax agent, such as Grant Thornton, might be entitled to an extension to file, sometimes to 15 May of the following year.
Tax year
The Australian financial year runs from 1 July to 30 June.
Income tax rates - resident individuals
1 July 2011 to 30 June 2012
| Taxable income ($) | Tax payable ($) |
|---|---|
| 0 - 6,000 6,001 - 37,000 37,001 – 80,000 80,001 – 180,000 180,001 and over |
0 15% of amount over 6,000 4,650 + 30% of amount over 37,000 17,550 + 37% of amount over 80,000 54,550 + 45% of amount over 180,000 |
Income tax rates – non-resident individuals
1 July 2011 to 30 June 2012
Taxable income ($)
Tax payable ($)
0 - 37,000
37,001 – 80,000
80,001 – 180,000
180,001 and over 29%
10,730 + 30% of amount over 37,000
23,630 + 37% of amount over 80,000
60,630 + 45% of amount over 180,000
In addition, the following levy’s apply for the financial year 1 July 2011 to 30 June 2012:
- Medicare Levy (1.5% to 2.5% of taxable income) (does not apply to non-residents and some temporary residents)
- Natural Disaster Flood Levy (0.5% to 1% of taxable income greater than $50,000).
Sample individual income tax calculation for year ending 30 June 2012
Assume a married Australian resident individual. Neither the spouse nor children have any separate income.
|
The individual’s income consists of a salary package of $185,000 consisting of: | |
|---|---|
| AUS ($) | |
| Base salary | 129,360 |
| Superannuation at 9% of base salary | 11,640 |
| Living away from home accommodation allowance | 26,000 |
| Provision of motor vehicle – fully maintained | 18,000 |
|
Salary package |
185,000 |
|
Additional investment income of: | |
| Interest | 5,000 |
| Capital gain or sale on shares held for > 12 months | 4,000 |
| Foreign dividend (withholding tax $1,500) | 8,500 |
|
| |
|
Taxable income: | |
| Base salary | 129,360 |
| Interest | 5,000 |
| Foreign dividend (grossed up for withholding tax) | 10,000 |
| Capital gain | 4,000 |
| Less 50% CGT discount | ( 2,000 ) |
|
146,360 | |
|
Tax on taxable income: | |
| Tax on $80,000 | 17,550 |
| Tax on $66,350 @ 37% | 24,553 |
| 42,103 | |
| Medicare levy 1½% @ $146,360 | 2,195 |
| Flood levy: | |
| Levy on $100,000 | 250 |
| Levy on $46,360 @ 1% | 463 |
| 45,011 | |
| Less credit for withholding tax on Dividends | ( 1,500) |
| Tax payable | $ 43,511 |
- employer pays Fringe Benefits Tax (FBT) on motor vehicle fringe benefit (note, in ordinary salary packaging arrangements, the cost of FBT would be costed back into the employee's remuneration package such that the employer is not ‘out of pocket’)
- professional subscriptions are not subject to FBT under the 'otherwise deductible rule'
- a reasonable Living Away From Home Allowance (LAFHA) is exempt from income tax and FBT where the taxpayer is living away from his usual place of residence.
Note: The Government has recently proposed changes to the LAFHA rules which if enacted will apply from 1 July 2012. Under the proposed changes, LAFHA provided to temporary residents who are living away from their overseas home will be assessable to the employee (and taxed at their marginal tax rate).
Temporary residents and Australian resident employees living away from an Australian home will be able to receive a reasonable LAFHA tax-free to the extent they are able to substantiate actual expenses for accommodation and food beyond a statutory amount.
Last updated 14 March 2012
This information has been provided by Grant Thornton Australia, a member firm within Grant Thornton International Ltd, and is for informational purposes only. Neither Grant Thornton Australia nor Grant Thornton International Ltd can guarantee the accuracy, timeliness or completeness of the data contained herein. As such, you should not act on the information without first seeking professional tax advice.
Grant Thornton International Ltd and the member firms are not a worldwide partnership. Services are delivered independently by the member firms.
Disclaimer
Contact us
For further information on expatriate tax services in Australia please contact Geoff Lloyd or visit www.grantthornton.com.au