How to Lodge your Australian Tax Return as an Expat
Filing an Australian tax return is mandatory if you earn income in Australia. Typically, employers pay income tax. However, most Australians are not familiar with their pre-tax income.
So, how can you file a tax return in Australia?
Do I need to file a tax return?
Nearly all Australians are required to lodge a tax return, as per the Australian Taxation Office (ATO).
The only exceptions are if you earn below the tax-free threshold as an Australian tax resident, you’re a foreign resident with no Australian income, or you’re a working holidaymaker earning under $45,001.
In all other cases, you must file a tax return reporting all your income earned in Australia (and worldwide income if you’re an Australian tax resident).
Requirements to lodge a tax return
In Australia, having a unique tax file number (TFN) is essential. The ATO assigns a TFN to all taxpayers. If you have never paid taxes in Australia, you need to apply for a TFN through the ATO.
Additionally, you will need a MyGov account. You may have to adjust the settings to file your tax return abroad. The quickest and easiest way to file your taxes is online through myTax.
You will need to provide your bank account information, evidence of net taxable income, proof of expenses and deductions, and any evidence of private health funds if required to pay the Medicare Levy Surcharge.
How do you do your tax return?
Filing your tax return is a straightforward process. You can complete your tax return by following our step-by-step process or engaging a registered tax agent to assist you.
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 their 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 return.
Please keep in mind that not-for-profit companies may qualify for certain tax concessions.
Suppose you obtain an Australian Business Number (ABN) and GST registration. In that case, the ATO will send you a Business Activity Statement (BAS) when it’s time to file your tax return.
The BAS is only applicable to businesses in Australia, so if you only own one investment property, you won’t have any BAS obligations. The BAS enables companies to report and pay specific taxes, including goods and services tax (GST).
Suppose you need to use a registered tax agent. In that case, the deadline for filing your tax return is October 31. If that date falls on a weekend, the deadline shifts to the next business day.
The fiscal year runs from July 1, 2022, to June 30, 2023, and you can start preparing your tax return from late July onward. Ensure that you provide a comprehensive account of everything that happened during the previous year.
Suppose you’re working with a registered tax agent. In that case, they will notify you of the timeline for submitting your tax return since tax agents frequently have unique lodging schedules.
On the other hand, the due dates for BAS filings might differ – they could be monthly or quarterly.
You can complete your tax return on your own or with a registered tax agent, depending on your financial situation. The MyGov online services can help you save time when filing your return.
Your return should include all assessable income received during the financial year, such as salary, wages, interest, and investment income. Non-resident expats must declare their status for tax purposes.
You can also deduct work-related expenses, property management fees, interest on home loans, and tenant advertising costs to lower your tax bill.
If you sell an Australian asset, you need to add capital gains to your tax return, and non-residents cannot claim the CGT main residence exemption. You can use certain tax deductions and offsets to reduce the amount of tax owed.
After you finish your tax return, the ATO will evaluate the information submitted via online services, which takes roughly two weeks to process. If you file a paper return, it may take up to 10 weeks. The ATO may request further information if required.
Regardless of when you submit your tax return, payment is due by November 21 for all taxpayers.
Is expat tax returns different?
Your Australian tax residency status is a significant factor in determining your income tax obligations. While most expats are not Australian tax residents, verifying with the ATO is essential.
Australian tax residents must report all income earned worldwide and can benefit from double tax agreement treaties to avoid double taxation.
Non-residents, on the other hand, only need to declare income earned in Australia, with no tax-free threshold.
Ensure that you report your residency status accurately in your tax return.
Can I get a tax refund?
Yes, getting a tax refund in Australia is possible if you have paid more taxes than you owe. This can happen if you have overpaid your taxes throughout the financial year or if you are entitled to claim certain tax deductions or tax offsets.
To receive a tax refund, you must file a tax return with the ATO and provide accurate information about your income, deductions, and other tax-related details.
The ATO will then calculate the amount of tax you owe or the refund you are entitled to and process your refund accordingly.
How to maximise tax return in Australia?
To maximise your tax refund as a non-resident, ensure you claim all eligible deductions. Keep receipts for expenses incurred during the financial year.
Here are some deductions you can claim for your investment property:
- Land tax
- Stamp duty
- Advertising expenses
- Strata fees
- Council rates
- Maintenance and upkeep (including garden maintenance)
- Legal costs related to the property
- Insurance costs
- Pest control expenses
- Property and asset depreciation
- Negative gearing
- Interest on your home loan
What happens if you don't file your tax return?
It’s crucial to meet your income tax return deadlines.
Failure to do so can lead to severe consequences, including penalty fees, referral to external collection agencies, final notices, default assessment with further penalties, auditing, withholding refunds until payment is received (e.g., on capital gains), and even prosecution.
What happens if I make a mistake on my tax return?
It’s crucial to verify all the details on your income tax return. Although the ATO may show understanding for honest errors, there’s no assurance that you’ll receive lenient treatment.
The ATO can penalise anyone, including those who intentionally provide incorrect information.
If you detect an error, notify the ATO immediately to rectify it.
Tax rates for foreign residents 2022 - 2023
Expats and non-residents are subject to different tax rates, which the ATO will calculate for you. Nonetheless, it’s helpful to estimate the approximate amount of tax you’ll owe to create a budget.
The tax rates are as follows:
- Taxable income up to $120,000: 32.5%
- Taxable income from $120,000 to $180,000: 37%
- Taxable income over $180,000: 45%
Get help from our experts!
To complete a tax return as an expat, you’ll require your tax file number, MyGov login, and receipts for all expenses.
Ensure to verify your tax residency status. Non-residents must only declare their Australian income, while tax residents must disclose all income, including earnings from abroad.
Consider consulting a registered tax agent for guidance before submitting your return. Feel free to speak with one of our tax professionals to maximise your tax deductions and offsets before filing your tax return.
Frequently asked questions
Taxpayers in Australia must file their tax returns by October 31 or the next business day if it falls on a weekend.
The tax year runs from July 1 to June 30, allowing taxpayers to prepare and submit their returns through online government services between July and October.
Payment of taxes is due by November 21.
Your taxable income determines your tax amount, and claiming all work-related expenses can increase your refund.
Suppose the ATO classifies you as a foreign tax resident. You’ll be subject to a 32.5% tax rate on your Australian income between $0 and $120,000.
Once you have completed your tax return, the ATO will assess the information you have provided. The evaluation process typically takes around two weeks (14 days) if you use online services to submit your return.
However, filing a paper return may take up to 7-10 weeks to process.
It’s crucial to file your tax returns on time, or else you may face significant repercussions, such as penalty fees, issuance of final notices, default withholding of refunds until payment is received (e.g., on capital gains), potential prosecution, and more.
We suggest you file your tax return without delay, irrespective of the reason for not filing the required return.
Typically, individuals and sole traders have a two-year window to make changes to their tax returns. The clock on this period begins ticking the day after the ATO sends your notice of assessment.
If you received benefits from a trust during a particular year, you are typically allowed to make changes to your tax return within four years.
However, this rule does not apply if the trust is considered a small business entity for that year or if the trustee of the trust, acting in their role as trustee, is a full self-assessment taxpayer for that year.
Companies and trusts can typically revise their tax returns within four years of receiving the notice of assessment.
However, if a company, partnership, or trust meets the definition of a small business entity outlined above, the amendment period is reduced to two years.
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