How does tax Work in Australia

If you are a foreign resident taking up employment in Australia it is strongly recommended that you seek expert advice on your Australian Taxation obligations. Expatriates working here will usually be liable for income tax on their Australian sourced income. This not only includes wages and salaries, but also interest and dividends that have their source within Australia.

Whether you are a resident for Australian income tax law will depend on your circumstances and this needs to be reviewed on a case by case basis.

If you are required to pay Australian income tax, it is important to note that the Australian tax year concludes on 30 June, and you will need to lodge an income tax return by 31 October. If you engage a tax agent or accountant they are eligible for lodgement extensions.

There are also a number of considerations that an expatriate needs to understand when negotiating their employment contract and also to legally minimising their tax. These include (but are not limited to):

Certain types of benefits can be “salary packaged” and result in significant tax savings. The two most common ones available to expatriates are the living away from home allowance (LAFHA) and motor vehicles. The LAFHA is designed specifically for expatriates to compensate for the additional costs of moving residency and provides for a tax break for food and rent. Motor vehicles can also be packaged and can often result in less tax being paid.
Expenses incurred in deriving your income can also be claimed. For example depreciation on your notebook, stationery, internet and professional subscriptions can often be claimed and this will in turn reduce your taxable income. It is good practice to retain receipts for all items of expenditure that you would like to claim as a tax deduction. There are harsh penalties if you get it wrong.
There are also a number of tax offsets or rebates that can be claimed to help reduce your tax. You will need to consult a tax expert to assist you with their eligibility.
Australia also has a compulsory superannuation system, whereby your employer is required to contribute a percentage of your income into an Australian registered superannuation fund. There are some limited exemptions to this for expatriates, but if you find your employer making these contributions you can claim these back if you were to permanently leave Australia.

Recent speculation over the Carbon Tax in Australia has led to a new debate over the viability of environmental control. To truly understand the concept of the CO2 tax, we need to identify the causes and effects of carbon emissions. Defined as the natural compound in the earth’s atmosphere, Carbon Dioxide (CO2) is a greenhouse gas that causes the elevation of temperature in the earth’s natural crust. This can be harmful for both the environment and living organisms. The recent heightened awareness of the effects of GHG has spurned a new industry and reformed government regulation. Many countries enforced the Kyoto Protocol stipulations and adhered to global UN environmental standards.

Significant producers of CO2 emissions, Australia, China and the US were slow to react to the new global standards, with each country debating the viability of this reform. Mining focused in nature, Australia’s coal industry has traditionally been a key generator of government revenues. Early in 2009, the Australian government worked on the idea of two taxes which would severely impact the industry. The hotly debated mining and carbon taxes struck a chord with various lobby groups and sectors in the economy. As a concept, the mining tax lent itself to increased government revenues from a royalty provision over commonwealth land. The second tax, called the carbon tax was more generalised in its focus, in turn affecting the everyday Australian. Although the carbon tax has not been implemented, it is currently receiving media attention and focus.

So what is the carbon tax, and how will it benefit the environment. A Carbon duty would place a price on all CO2 emissions in specific sectors. Companies or individuals would be required to pay an extra tax to compensate the harmful generation of Carbon Dioxide. With Australia being one of the largest emitters in the world, due to the coal, mining and agricultural sectors, the general public have debated over the fairness of a tax. The average Australia who works in the corporate sector, and is not benefited by mining revenues, believes the tax would be an extra cost that could translate into further appreciation in CPI. Prime Minister Gillard has been adamant in her approach to the carbon tax proposal, with the government receiving significant opposition. It is important to keep the debate in perspective with benefits and drawbacks to both arguments. A carbon tax, will further develop a general environmental sustainability plan, however it could hinder economic growth and mining development. Over the next few months the debate will certain have an impact on the political framework of Australia.

The Australian culture and attitude to life is very unique in a world where issues are taken out of context and many things are taken too seriously. Their attitude and national pride has evolved over the years, in what is still a very young country. This land is now becoming one of the most popular countries for Expats to relocate, due to a mixture of the weather, the laid back attitude to life and potential for the future.

The country itself offers such a variety of landscape and lifestyles with many of the nationals living in the “outback” where their nearest neighbour can be literally hundreds of miles away. The fact that such a vastly spread society has been able to prosper is a testament to both the authorities and the Australian’s themselves. Australian Culture While Australia was originally dominated by the Aborigine tribes, prior to becoming a colony of Great Britain, there is a heavy Anglo-Celtic theme to the country. In what is historically a fairly new nation, the Australians are slowly but surely adding in their own particular nationalistic characteristics.

The emerging “Aussie” culture has been strongly influenced by American culture with TV and the media very strong in Australia. There has also been a noticeable influx of immigrants from the nearby Asian countries, which together with English speaking immigrants have added to the variety and depth of the

Australian society

As well as TV and the media, sport plays a major part in the Australian way of life with Australian Rules Football, Cricket and Rugby among the many sports in which the countries sports people have excelled. There is a long running rivalry with the United Kingdom, which stems form the earlier days of British rule – culminating in the fierce battle for the cricketing “Ashes” series.

Employment in Australia

Australia has a very impressive unemployment record with under 5% of the work force currently out of work. The main areas of industry in Australia are agriculture, minerals and commodities with the vast desert lands of the out back holding the key to the wealth and prosperity of this great national. The country is home to some of the largest mining companies in the world, with only a fraction of the land available having been explored.

This commodities led economy has led to an imbalance in exports and imports, with Australia predominately an importing country. This has had an impact on the current account deficit of the economy, however rising commodity prices and an ever expanding holiday market have alleviated this to some extent,

There is also the emergence of a services sector, with many areas of professional expertise in relatively short supply in the country. This has led to the influx of many professionals from overseas for industries such as nursing, dentistry and surgery. Many of these foreign professionals have been able to take advantage of a fast track immigration process designed to attract professionals to make up the short fall within Australia.

Property in Australia

The Australian property market obviously has a number of completely different sectors (between the outback and inner city residential markets) but most immigrants will obviously look to the major inner cities on their arrival. As the economic well being of the country tends to depend upon the fluctuating price of commodities, the housing market has historically been a difficult market in which to engineer a good return – however, there are signs that this is changing.

In direct comparison to the UK, the Australian residential market is focused on renting rather outright house purchase. In fact, in many areas of the country it is easier to buy a quality property than rent one. This offers a useful and economical entry point into the housing market, for the expat looking to relocate in the country.

Even though 2005 and 2006 have been difficult times for the Australian housing market, many are forecasting an upturn in 2007. Compared to other developed nations, the Australian property market offers varying and slightly disappointing returns, although for those looking to stay for the long term there may be the opportunity to benefit in due course.