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Travel Forums Australia / New Zealand & The Pacific MAXIMISING TAXBACK

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1. Posted by macpacker (Budding Member 5 posts) 12y Star this if you like it!

I'm an Irish traveller on a round the world trip with currently workin in OZ for a few months. I was just wonderin does anyone know how much of your tax u get back with a work and travel visa, do you need to wait till the end of the tax year to apply and how long you have to wait before you do get it back? Can't really travel on without the cash and as always the more the better. Any info lawful or otherwise on how to maximise the taxback would be very handy.

2. Posted by Peter (Admin 6421 posts) 12y Star this if you like it!

As far as I understand it, you shouldn't get any tax back if the employer does things correctly.

If my memory serves me correctly, the terms of the visa are a flat 28% tax with NO tax free threshold. Makes it pretty simple for employers to take out the correct tax from your salary and pretty much near impossible to get anything back. Unless you commit tax fraud that is. But then you would be jeopordizing your chances of ever visiting Australia again!

You might be able to get some super annuation back though.

3. Posted by Sam I Am (Admin 5588 posts) 12y Star this if you like it!

Have you checked taxback? There are some ways that money can be retrieved, but this kind of changes from time to time depending on what loophole the Australian tax authorities have left open.... and it could be no tax back either (or even mean extra taxation!). Superannuation is probably something you'd be more sure of getting back.

In both these cases there's some documentation required that can be a pain to get if you don't already have it...

4. Posted by majito (Respected Member 442 posts) 12y Star this if you like it!

I think you emailed me for those forms Macpacker. You can get money back depending on your circumstances. If you were ordinarily resident in one place for 6-months you start to fall into the resident category thus attracting the tax free threshold and thus enabling a refund. It all depends on what you tell them.

5. Posted by Peter (Admin 6421 posts) 12y Star this if you like it!

Quoting majito

It all depends on what you tell them.

Well yes, lodging a deceitful tax return usually gets you more money. Basically tax fraud.

The ATO is pretty clear about working holiday makers' status:

Working holidaymakers

You are a working holidaymaker if you are a tourist who intends to work and travel in Australia temporarily. You are not an Australian resident for tax purposes.

As a working holidaymaker who is a non-resident for tax purposes you:

* pay tax on every dollar of income you earn in Australia – this tax is taken out by your employer before you receive your wages
* generally do not pay tax on income you earn overseas (for example, in your home country)
* do not pay the Medicare levy

from here

There is no talk of a 'six months in one place' rule of thumb or anything like that.

Then again, I managed to get tax back from my working holiday visa because I moved on to permanent residency at the end of the visa. But that's an entirely different situation to someone who is only here for a year or two.

6. Posted by majito (Respected Member 442 posts) 12y Star this if you like it!

Tax Fraud? No, totally incorrect Peter. I wouldn't advocate any sort of fraud in this forum or anywhere for that matter.

If while you are your behaviour is consistent with that of a resident you will be a resident for tax purposes. In the residency test on the ATO site I said I had a 417 visa, I also said I rent an apartment, I also said I want to stay in one place for six months, and I said I was a member of a club or association. I said I was NOT intending to stay permanently. This is not typical working holiday maker behaviour, but is very common amongst the English and Irish working holiday makers.

This is the answer below given to me by the ATO. Quite legal

You are an Australian resident for taxation purposes as your behaviour during the time you spend in Australia reflects a degree of continuity, routine or habit that is consistent with residing here.
Based on this I would legally be eligible for a tax refund (if owing).

Happens every day.

7. Posted by Peter (Admin 6421 posts) 12y Star this if you like it!

Hmm interesting. Apologies majito, but I was not aware of this form you mentioned. It indeed does make it possible to be a 'resident' while not being an actual resident. Beaurocracy at its worst really.

So I suppose the advice to ANY working holiday visa maker is to check this tool before actually visiting Australia, so they can ensure they get tax back at the end. Though of course, 90% of backpackers just act on hearsay and will tick resident because, let's face it, they won't know this checking tool exists.

Here is a link the calculation tool for reference btw.

On a side note, it seems in the scenario you mention, the deciding factor is 'leasing your own apartment', because I tried a bunch of other ones and all of them returned non-resident.

Interesting to see how renting an apartment is encouraged so strongly. Governments baffle me sometimes

And another question this might lead to; does this mean you also have to then pay the medicare levy? And if so, does this mean you have a right to medicare?

You learn something new everyday

8. Posted by majito (Respected Member 442 posts) 12y Star this if you like it!

There are companies out that actively encourage backpackers to say they are residents so they can get their tax and superannuation business. When you wave $$ in front of people they will agree to almost anything. Especially if they are leaving town soon.

This is fraud, for sure, but who's committing it - the backpacker or the company? The answer is probably the backpacker, but they are enticed into it by the company. The tax office knows about this, but they are such bungling bureaucrats that they don't act on it. And its a very competitive business and those in it are amongst the most dodgy characters in this industry all with a history of equally dodgy businesses. In the end they always get caught.

But, they put money into a travellers pocket, and as long as our government continues to tax low-income earning travellers at 29%, and continues to refuse them tax-free thresholds and no tax returns then I for one encourage the process.

9. Posted by macpacker (Budding Member 5 posts) 12y Star this if you like it!

Thanks verymuch for all the information,
I will try to use it as best I can. It's proven to be a bit of a touchy subject and there's obviously no clear answer. I looked up the ato site and it states you are a resident for tax purposes if you "are visiting Australia for more than six months and for most of that time work in the one job and live at the same place". I think that where this restricts backpackers is that on a working holiday visa you can only work for 3 months at a time and 3 months can't be "most" of 6 months. I suppose it could also depend on other circumstances.

10. Posted by Peter (Admin 6421 posts) 12y Star this if you like it!

Hey Mac, I for one would use that form and play with it until you find a situation that is acceptable for you. I think you can get away with working in a job for 3 months as long as you have leased an apartment somewhere for at least 6 months.

But of course, finding a lease for that period (and furnished) isn't easy or cheap and maybe you don't want to stay in one spot for that long!

Then again, maybe if you play with that form there might be some other way to make it consider you a resident.