AS a backpacker, you may be earning peanuts, but chances are you’ll still be paying out to the Aussie taxman, especially if you don’t qualify as a resident for tax purposes.
The good news is that what goes out, should come back – it’s just a matter of lodging your return. With a bit of luck, you’ll leave the country with enough dough in your pocket to keep you chilling on a beach in Fiji for a week or so. It’s only up the road, you know.
So how do you make sure tax time yields a windfall from the Australian Tax Office (ATO)?
For many people, especially those new to the Australian tax system, the easiest way is to lodge your return through a registered tax agent. There are plenty that specialise in ex-pat and backpacker finance, but it’s still worth shopping around, as fees can vary quite a bit.
Some agents offer to pay your tax refund on the spot, (as soon as they have completed processing your tax) and others guarantee not to charge any fee at all if they can’t get you a refund.
However, don’t just look for the lowest fees, as when it comes to tax, it is also a case of ‘buyer beware’ and some people have learnt the hard way the importance of having an accountant that is registered with a professional body.
You should always deal with someone who belongs to a professional organisation such as Certified Practising Accountants (CPA) or Chartered Accountants (CA) because there’s always a fallback whereby you can complain to the parent body.
To ensure you not only have time to apply for your refund, but also that you have it in your hot little hands before you leave, it is advisable to apply for your refund well in advance of your departure date. However, even if you are working up to the last minute, you can still get the ball rolling.
You should be aware that your refund may still be delayed, depending on the efficiency of your employer. Sometimes employers take a while to sort out details of your earnings (a group certificate) and this may hold up any refund.
If you’re a procrastinator and you just don’t get around to your tax before you leave the country, remember you can always phone or email your accountant with the details once you are back home in Ireland. That cash will come in handy when you’re trying to make the rent in rainy Dublin.
IF you’re after a refund, the first and most important question to ask is, do you qualify as a resident for tax purposes? (see panel opposite). If you do, you will be entitled to earn your first $6,000 tax free. The ATO does not look at your visa to determine this but at your behaviour, which gives you a fair bit of wriggle room. Essentially, if you behave like you’re here for the long haul – even if you’re not – the tax office will deem you a resident.
THERE are still strict tax regulations for all new arrivals in Australia. For tax purposes, you will also need either an Australian Business Number (ABN) or a Tax File Number (TFN).
When you first start a job, you will need to complete a tax file number declaration. If you are on a Working Holiday Visa, you should, going by the book, answer “no” to the question, “Are you an Australian resident for tax purposes?”.  Your employer will then take out tax at the non-resident rate of 29 per cent and you will also have to pay tax from the first dollar you earn – you will not be eligible for the $6,000 tax-free threshold for residents.
While this may sound like bad news, you can be deemed a resident when you put in your income tax return (see panel).
Some backpackers opt to get an ABN over a TFN, but you should think seriously before doing this. While it may make you more attractive to some employers, there are disadvantages.
By opting for an ABN you are declaring yourself to be an Australian Business and, as such, you will have to pay GST (if you earn over the $50,000 threshold) and prepare a tax return.
If you ignore this and leave the country, you may not be allowed to enter Australia again, as you will be deemed to have acted unlawfully as a business.
PAYG workers on average wages are more kindly treated by the Irish taxman than in Australia.
In Ireland, after tax credits and any other tax reliefs you may be entitled to have been deducted, you pay 20 cents for each euro you earn up to €36,400 ($61,677). For each euro over €36,400 you pay 41 cents. So the top rate of tax kicks in at €36,401 ($61,678).
In Australia, the top rate of 45 per cent does not kick in until you earn $180,001 (€106,203) but you pay 38 cents for every dollar you earn over $80,000 (€47,201). However, you start paying tax at a relatively low $6,000 (€3,540).
From $6,001 to $35,000 (€20,650) you pay 15c in the dollar. From $35,001 to $80,000 you pay 30 per cent.
So, a single person earning say $50,000 (€29,501) in Australia would pay $9,050 in income tax. A single Irish taxpayer earning a similar amount, notwithstanding the current emergency levy, would pay just $8,350, taking into account the single person’s tax credit of €1,830.
The Goods and Services Tax (GST) is a flat 10 per cent in Australia compared to 21 per cent for the equivalent Value Added Tax (VAT) in Ireland.