Tax questions for a Working holiday visa

[tingtongman]

Hello I have a few questions about the taxation in Oz. I plan to spend all of my WHV working, with the main focus being work and not travel or sight seeing. My goal is to gain as much money as I can after the 365 days.

 

1)

 

When I fill in information for a TFN:

 

Do I get the option of saying if I am a resident or non- resident? Or do I fill in myself when I get Employment Declaration for any jobs I have?

 

I understand what is required to be considered a resident or non-resident at at the end of the day

 

the matter of whether you are a resident or a non-resident for tax purposes is between you, the taxman and if you both can't agree, the court.

 

 

2)

 

http://www.ato.gov.au/

 

Visiting the site above, I have the option of going as a "individual" or as a "business" (sole trader).

 

To set up as a business you must:

 

You provide the following information when you register for an ABN:

 

• entity type - for example, sole trader or partnership
  
• contact details
  
• bank account details
  
• details of associates such as the public officer of a company, directors, partners, members or trustees – if an associate is not themselves registered with us we will also need to verify their identity documents as if they were registering themselves.
  

 

 

 

I could set all that up while being in the UK. Would this option be reasonable for someone on a WHV? As I could label my travel costs as taxable etc. Or am I just being too far fetched?

 

 

thanks.

[lebourvellec]

You can not register for a TFN until you are in Australia.

 

If you spend 6 months in one place you are Resident for tax purposes.

[tingtongman]

thanks. So I guess at any point in filling in either my TFN or Employment Declaration I wont have the option to put one or the other?

 

But im confused so is this website incorrect?

 

http://www.workstay.com.au/working_holiday_tax.htm

The confusion continues where some employers will insist that you are a Non-resident for tax purposes and direct you to fill in your Employment Declaration accordingly. They have NO RIGHT to do this as Australia's' tax system is a 'self assessing system' meaning the relationship we have with regards tax is purely between 'us' (as individuals) and the taxman (and possibly the Administrative Disputes Tribunal or the Australian Federal Court if there is a dispute).

[lebourvellec]

http://www.ato.gov.au/Individuals/Income-and-deductions/In-detail/How-tax-works/Working-holidaymakers-and-international-students/

[tingtongman]

Great link it has answered almost all my questions.

 

I did this test and it said I am a "resident" according to the answers I put down.

 

You can use the Are you a resident?

 

I quoted this part

 

[h=3]While you are working[/h] To start work, you will need to complete a TFN declaration.

 

At the question ‘Are you an Australian resident for tax purposes?’ your answer depends on your situation:

 

 

• Answer no, so your employer takes out tax at the foreign resident rates, if one of the following applies
  
  • you are a working holidaymaker travelling and working in various locations in Australia
    
  • you are holidaying in Australia
    
  • you are visiting for less than six months
    

   

   

   

  [*]Answer yes, so your employer takes out tax at the resident rates, if you are an international student studying in Australia for six months or more.

   

 

 

 

Although the reason for me to be here is to work only, my Visa is a "working holiday visa". So does #2 apply to me in that quote above?

 

 

This site states :http://www.taxback.com/au-tax-refund-whm-faq.asp

 

f you've moved to Australia on a working holiday, student, sponsorship, or any other kind of visa, you can be deemed a resident for tax purposes if you have lived in Oz continuously for at least 6 months (183 days) and have been in one job and have lived in one single place for that whole time.

 

If you go to Australia on a Working Holiday Maker visa, you may be given a non-resident Tax File Number (TFN) to start with. Having a non-resident TFN assigned to you at the start of your Australian stay does not mean you're a non-resident for tax purposes. Your work and living behaviour are the main criteria in your tax residency designation. You need to complete a one-page residency questionnaire when filing your tax return so that the correct designation can be identified.

 

 

 

So at the start I would have to say im a "non-Resident"? then when the working tax year is over,I can claim my tax back as a "resident" assuming I met the criteria needed?

[Cez]

I'm not sure it really matters - I was in the same boat and applied for a non-resident tfn but then put on my employee declaration thingo that I was resident for tax purposes. I was taxed at the tax resident rate. If you know you're going to be in the one place, there's no harm in applying for a tfn as a tax resident, surely. You don't want to be paying non resident tax for a long time, even if you get to claim it back. Ouch!

[tingtongman]

I'm not sure it really matters - I was in the same boat and applied for a non-resident tfn but then put on my employee declaration thingo that I was resident for tax purposes. I was taxed at the tax resident rate. If you know you're going to be in the one place, there's no harm in applying for a tfn as a tax resident, surely. You don't want to be paying non resident tax for a long time, even if you get to claim it back. Ouch!

cool what I wanted to know thanks.

[Alan Collett]

I'm not sure it really matters - I was in the same boat and applied for a non-resident tfn but then put on my employee declaration thingo that I was resident for tax purposes. I was taxed at the tax resident rate. If you know you're going to be in the one place, there's no harm in applying for a tfn as a tax resident, surely. You don't want to be paying non resident tax for a long time, even if you get to claim it back. Ouch!

 

 

Exercise care, as I anticipate the ATO will be looking closely at those who obtain a Non Resident TFN, and subsequently lodge a Tax Return claiming tax residence.

 

'tis best to secure a Resident TFN to mitigate against the possibility of the ATO checking your status at a later date.

 

Best regards.

[Alan Collett]

thanks. So I guess at any point in filling in either my TFN or Employment Declaration I wont have the option to put one or the other?

 

But im confused so is this website incorrect?

 

http://www.workstay.com.au/working_holiday_tax.htm

 

 

There are several errors on this webpage, including the amount of the tax free threshold and the rate of income tax paid by non-residents.

 

In case of need: http://www.ozmigr8.com/faqs/tax-faqs/

 

Best regards.