Expatriate tax ebook - Australia

Facts and figures

Pre arrival procedures
Employment visas
Tax year
Tax returns and compliance
Income tax rates
Sample income tax calculation

Pre arrival procedures
Foreign assets owned by temporary residents are outside of the Australian tax net. However, should a person arrive in Australia to live here permanently, then foreign owned assets need to be valued and that value becomes the deemed acquisition cost for Australian tax purposes.

Employment visas
Expatriates who require a work visa must apply for this before taking up employment in Australia (it can take 6 to 8 weeks for a visa to be granted). It is therefore important that written employment contracts are finalised within sufficient time to submit to Department of Immigration and Citizenship.

It is important to identify and apply for the correct type of visa.

Businesses are able to sponsor personnel from overseas for a temporary visa valid for up to four years. Minimum remuneration requirements apply. Individuals taking up sponsorship need to demonstrate that:

they have the skills which match the vacancy

they will be paid in accordance with the company nomination

they meet health and character requirements

they maintain adequate medical insurance

The expatriate’s spouse may be included on the same visa application.

Certain persons on special types of visas, eg 457, are likely to be classified as ‘temporary resident’ for tax purposes.

Tax returns and compliance
31 October is the due date for filing tax returns. Clients filing through a tax agent, such as Grant Thornton, might be entitled to an extension to file, sometimes to 15 May of the following year.

Tax year
The Australian financial year runs from 1 July to 30 June.

Income tax rates - resident individuals
1 July 2011 to 30 June 2012

Taxable income ($)	Tax payable ($)
0 - 6,000 6,001 - 37,000 37,001 – 80,000 80,001 – 180,000 180,001 and over	0 15% of amount over 6,000 4,650 + 30% of amount over 37,000 17,550 + 37% of amount over 80,000 54,550 + 45% of amount over 180,000

Income tax rates – non-resident individuals
1 July 2011 to 30 June 2012

Taxable income ($)	Tax payable ($)
0 - 37,000 37,001 – 80,000 80,001 – 180,000 180,001 and over	29% 10,730 + 30% of amount over 37,000 23,630 + 37% of amount over 80,000 60,630 + 45% of amount over 180,000

In addition, the following levy’s apply for the financial year 1 July 2011 to 30 June 2012:

Medicare Levy (1.5% to 2.5% of taxable income) (does not apply to non-residents and some temporary residents).

Natural Disaster Flood Levy (0.5% to 1% of taxable income greater than $50,000).

Sample individual income tax calculation for year ending 30 June 2012
Assume a married Australian resident individual. Neither the spouse nor children have any separate income.

The individual’s income consists of a salary package of $185,000 consisting of:
	AUS ($)
Base salary	129,360
Superannuation at 9% of base salary	11,640
Living away from home accommodation allowance	26,000
Provision of motor vehicle – fully maintained	18,000
Salary package	185,000
Additional investment income of:
Interest	5,000
Capital gain or sale on shares held for > 12 months	4,000
Foreign dividend (withholding tax $1,500)	8,500
Professional subscriptions are paid by employer meanwhile the expatriate maintains minimum required Australian health cover to prevent the 1% Medicare Levy Surcharge.
Taxable income:
Base salary	129,360
Interest	5,000
Foreign dividend (grossed up for withholding tax)	10,000
Capital gain	4,000
Less 50% CGT discount	( 2,000 )
	146,360
Tax on taxable income:
Tax on $80,000	17,550
Tax on $66,350 @ 37%	24,553
	42,103
Medicare levy 1½% @ $146,360	2,195
Flood levy:
Levy on $100,000	250
Levy on $46,360 @ 1%	463
	45,011
Less credit for withholding tax on Dividends	( 1,500)
Tax payable	$ 43,511

Living away from home allowance (LAFHA) exempt from income tax and fringe benefit tax (FBT) where taxpayer living away from usual place of residence

Employer pays FBT on motor vehicle fringe benefit (note, in ordinary salary packaging arrangements, the cost of FBT would be costed back into the expatriate's salary package such that the employer was not ‘out of pocket’)

Subscriptions not subject to FBT under the ‘otherwise deductible rule’

Information about Australia:

Last updated 14 June 2011

This information has been provided by Grant Thornton Australia, a member firm within Grant Thornton International Ltd, and is for informational purposes only. Neither Grant Thornton Australia nor Grant Thornton International Ltd can guarantee the accuracy, timeliness or completeness of the data contained herein. As such, you should not act on the information without first seeking professional tax advice.

Grant Thornton International Ltd and the member firms are not a worldwide partnership. Services are delivered independently by the member firms.
Disclaimer

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For further information on expatriate tax services in Australia please contact Geoff Lloyd

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