If you are looking for answers on international student tax in Australia, you have come to the right place.
Filing tax returns or paying taxes in Australia may seem daunting at first. Still, once you understand the process, you will be entitled to several benefits like tax offsets, the tax-free threshold, lower tax rates, and more.
The financial year in Australia runs from July 1 to June 30 the following year.
Here’s everything you need to know about how tax works in Australia, including international student tax returns, the student visa tax rate, if you can claim uni fees on tax, how to get a tax refund, and how to lodge your tax return before the due date.
1. Are You an Australian Tax Resident?
Suppose you are an international student living in Australia for more than six months. In that case, you will be considered an Australian resident for tax purposes.
According to the ATO (Australian Taxation Office), by residing in Australia for over six months, your routines and behaviour become consistent with a person living in the country for tax purposes.
If you are unsure whether you are a tax resident or not, you can get in touch with a registered tax agent or visit the ATO’s website for more clarification.
2. What Happens If You Are a Tax Resident in Australia?
Assuming that you are a tax resident in Australia, you will have to consider some critical tax implications. If your taxable income is $18,200 or below, you will be entitled to a tax-free threshold, and you won’t have to pay any income tax for the year ending on June 30.
Additionally, you can also apply for a refund. For instance, you had a part-time job and received a salary from which your employer deducted the income tax.
If the total taxable income from your part-time job was $18,200 or less, you could apply for a refund for the deducted amount from your salary.
No matter where you earn your income, you will be liable to pay tax in Australia on all your assessable income for the year ending on June 30.
Also, if inadequate income tax has been deducted from your salary, or you have received other assessable income for which you owe tax. In that case, you will be legally required to file a return and pay tax.
3. How To Lodge an International Student Tax Return In Australia?
You can file a tax return at the end of the tax year in Australia. Your employer will provide a summary showing the total income you have earned and the amount of tax deducted.
The ATO will check how much was deducted from your salary and send you back a notice of assessment and your tax refund if you are eligible for it.
The easiest and most secure way to lodge a tax return for international students is online through the ATO’s website. However, you can also file a tax return through a tax agent using a paper form.
Remember, the tax year in Australia ends on June 30, and the deadline to file your tax return is October 31.
When you lodge your tax return, apply for all deductions, including computers, clothing, phones, books, and more.
4. What Are The Requirements For Lodging an International Student Tax Return?
Everyone, including international students who file an income tax return, needs a TFN (Tax File Number). Any income you receive (including bank account interest) without a TFN might get taxed at the highest rate.
To apply for the TFN online, you can visit the ATO website. If you are not applying online, you can fill out the application forms available at the Australian Taxation Office and then submit the documents at any tax office.
You will also need to collect other information, which includes the following:
Bank Statements: showing the interest you have received.
Payment Summary: issued by the employer at the end of each financial year, showing how the tax is withheld and the total income you earned.
Dividend Slips: showing payments made by the organisations you have your shares in.
Photo ID: like your passport.
Other invoices, receipts, and work-related expenses.
Most time, international students who take up low-income jobs or work part-time end up paying more tax than required. Lodging international student tax returns in Australia ensures they get a tax refund.
Note: If you are expecting a tax refund, you need to have your bank account information ready so that your tax refund gets deposited immediately.
5. What Types of Income Are Included in Your Return?
As you file your tax return, you must show all the taxable income you received in the financial year. You can generate income from several sources, which may include the following:
Wages and salaries as a part-time, full-time or casual employee.
Income from bank interest.
Bonuses and allowances.
Government allowances include Austudy payments, Youth Allowance, Newstart Allowance, and more.
Gratuities and tips earned while working.
Income received as an independent contractor.
Capital gains through the sale of assets.
Business income, which does not include fees received from a hobby.
Distributions received as a partner in a partnership.
Bear in mind that any work-related expenses and personal deductions can reduce the total amount of assessable income.
6. What Form of Deductions Can You Claim?
You can reduce your total taxable income through deductions. You can claim these amounts for a few expenses directly related to earning your income.
Deductions are of three types — self-education expenses, work-related deductions, and personal deductions.
Here are some of the most common forms of deductions you can claim:
Work-related phone and internet expenses.
Costs for compulsory work uniforms or protective clothing.
Vehicle and travel expenses between work sites. This does not include the fees of travel between work and home.
Home office running costs. It includes printers, computers, furniture, heating, cooling, lighting, and more.
Work-related subscription and union fees.
You may also be able to claim work-related deductions for the cost of briefcases, tools of the trade, and calculators that cost less than $300. Remember, you can only claim these expenses if you have kept the relevant receipts, invoices, and bank statements.
7. Is it Better to Do Your Tax or Use a Tax Agent?
International students can easily do their taxes in Australia themselves by using ATO’s myTax product. However, if you need additional expertise, you can take help from a registered tax agent who usually charges a fee to lodge returns.
Some agents even deduct the amount they charge directly from your claimed tax returns. This way, you do not need to physically hand them over the money. Here are a few benefits of hiring a tax agent:
They make sure to include all the deductions that you are eligible for.
A tax agent or an accountant will also ensure the accuracy of your returns.
You can claim the cost of hiring a tax agent and the tax returns for the next fiscal year.
8. When Can You Claim Self-education Costs?
Suppose you are studying a course in Australia along with your current job to improve or maintain your skills. In that case, you are eligible to claim the cost of your study. This applies only for self-education or the course has a satisfactory connection to your current job as an employee.
You can also claim the costs of your textbooks, travel costs, stationery, course fees and items like tablets, laptops, and printers.
Note: Check out Taxation Ruling by the ATO to see clear examples of when you can and cannot claim self-education costs.
9. How To Claim Tax Returns If You Are Leaving Australia?
If you are an international student who wants to leave the country before the financial year ends, you can lodge your tax returns earlier. In this situation, you need to file a paper return, which might take some time.
However, suppose you have no time to lodge a paper return. In that case, another option is to get it done online from your home country after June 30.
10. How Long Does It Take to Get Your Refund?
If you file your tax online, you will get your refund within two weeks. And it might take approximately six weeks to receive your refund by mail.
11. Where To Find More Help?
If you need help regarding tax in Australia, the best place you can visit is the ATO website, where you will find answers to every question.
Your university’s financial or student services might also be able to advise you on how to pay taxes in Australia.
12. Frequently Asked Questions (FAQs)
Do International Students Need To File Taxes in Australia?
Yes. Different tax treatments apply to overseas students based on their study tenure and income earned in Australia:
When Studying in Australia for Over Six Months
In the case of international students, they will be classified as "Resident Australians" for tax purposes. As such, they will be subject to paying taxes at a similar rate as domestic students in Australia.
If international students worked part-time and earned income exceeding the tax-free threshold of $18,200, they will be obligated to file a tax return at the end of the financial year, reporting their Australian income.
However, if their earnings fall below the tax-free limit and no taxes were withheld, international students will not need to file a tax return. Instead, they must provide a non-lodgement advice to the Australian Taxation Office, indicating their exempt status.
It is important to note that if international students mistakenly paid taxes despite earning below the tax-free threshold, they will need to file a tax return in order to claim a refund of the taxes paid.
When Studying in Australia for Less Than Six Months:
If your studies are under six months, and you plan to leave Australia after, you will NOT be considered a resident for tax purposes.
In this case, you must file a tax return stating any Australian income earned during your stay in Australia. However, as a "Non-Resident Australian," you will not be eligible for a tax-free limit and must pay tax at a higher rate applicable to non-residents.
How Much Tax Do International Students Pay in Australia?
The amount of tax payable depends on whether you are considered a "Resident" or "Non-Resident" in Australia for tax purposes.
Resident Tax Rates 2023-24
|Taxable Income||Tax on this Income|
|0 – $18,200||Nil|
|$18,201 – $45,000||19c for each $1 over $18,200|
|$45,001 – $120,000||$5,092 plus 32.5c for each $1 over $45,000|
|$120,001 – $180,000||$29,467 plus 37c for each $1 over $120,000|
|$180,001 and over||$51,667 plus 45c for each $1 over $180,000|
Non-Residents/Foreign Residents Tax Rates 2023-24
|Taxable income||Tax on this income|
|0 – $120,000||32.5c for each $1|
|$120,001 – $180,000||$39,000 plus 37c for each $1 over $120,000|
|$180,001 and over||$61,200 plus 45c for each $1 over $180,000|
Working Holiday Maker Tax Rates 2023-24
|Taxable Income||Tax on this Income|
|0 – $45,000||15c for each $1|
|$45,001 – $120,000||$6,750 plus 32.5c for each $1 over $45,000|
|$120,001 – $180,000||$31,125 plus 37c for each $1 over $120,000|
|$180,001 and over||$53,325 plus 45c for each $1 over $180,000|
Do international Students Need to Pay The Medicare Levy?
No. International students are not entitled to Medicare benefits in Australia, so they are not liable to pay the Medicare levy.
However, they need to apply for a Medicare Entitlement Statement from the Services Australia website to get an exemption from paying the Medicare levy.
This statement informs you about the financial year period you were not eligible for Medicare.
Do international Students Need a TFN in Australia?
Yes. As an international student, you need a Tax File Number (TFN) to lodge a tax return in Australia. The Australian Government will withhold 46.5% of your earnings without a tax file number.
Additionally, you will miss out on other benefits of the Australian tax system, such as the tax offsets and tax-free threshold.
Can International Students Claim Tax Back?
Many students have the same question - Do international students get tax refunds in Australia? If international students earn an income below the tax-free threshold, i.e., $18,200, they may get all the paid taxes back.
However, if they have earned over the threshold, they may claim a part of their taxes, and the Government will retain the rest based on the income gained.
Do International Students Need a ABN?
Yes. Having an Australian Business Number (ABN) is necessary for overseas students if they have worked as a contractor in Australia.
What Can International Students Claim on Tax in Australia?
You can claim an array of work-related expenditures as a deduction in your tax return. Some of the examples include:
Home office expenditure
Work-related internet and phone expense
Travel expenses between job sites
Laundry and uniform expenditure
Tax accountant charges
You need the receipts and invoices of the expenses you wish to claim in a tax return. It is essential because ATO may penalize you if you fail to upload the necessary documents while lodging a tax return.
Is a TFN Free for International Students?
Yes. Applying for a Tax File Number online through the ATO website is free.
Can International Students Work Full-Time with an ABN?
Having an Australian Business Number benefits overseas students as it can open up several job prospects while studying in Australia. However, per the government rules, they can't work full-time, i.e., 40 hours a week in Australia.
It is essential to know that from 1 July 2023, student visa holders can work for a maximum of 48 hours per fortnight.
It ensures that students focus on quality education in Australia while supporting themselves financially, obtaining essential work experience, and contributing to Australia's workforce needs.
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