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Discussion Starter · #1 ·
Hi all, I have a quick question as I don't understand how the tax income is calculated here?
Thank you!

1/
From ato.gov.au/Rates/Individual-income-tax-rates it says:
I became an Australian resident on 1st May this year. This means I will be in Australia for two of the twelve months in the income year.
My tax-free threshold is:
= 13,464 + ((4,736 × 2) ÷ 12)
= 13,464 + 789.33
= 14,253.33
This means I will not pay tax on the first 14,253 of my taxable income for the income year.
For any taxable income over 14,253 I will start to pay tax at the rate of 19%.

2/
However on my May pay, I get the following:
My monthly salary is 11033.34
Taxable income would be 3198 + .39c on every dollar in excess of 10833.33
3198+ 78 = 3276.00
 

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Hi all, I have a quick question as I don't understand how the tax income is calculated here?
Thank you!

1/
From ato.gov.au/Rates/Individual-income-tax-rates it says:
I became an Australian resident on 1st May this year. This means I will be in Australia for two of the twelve months in the income year.
My tax-free threshold is:
= 13,464 + ((4,736 × 2) ÷ 12)
= 13,464 + 789.33
= 14,253.33
This means I will not pay tax on the first 14,253 of my taxable income for the income year.
For any taxable income over 14,253 I will start to pay tax at the rate of 19%.

2/
However on my May pay, I get the following:
My monthly salary is 11033.34
Taxable income would be 3198 + .39c on every dollar in excess of 10833.33
3198+ 78 = 3276.00
Not an expert, but I would guess that employers are obliged to withhold at the rate applicable as though you were working for the whole year. They are not to know (or presume) if you were working elsewhere before this job. I imagine you will get a refund of tax paid on filing your return.
 

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5,704 Posts
Hi all, I have a quick question as I don't understand how the tax income is calculated here?
Thank you!

1/
From ato.gov.au/Rates/Individual-income-tax-rates it says:
I became an Australian resident on 1st May this year. This means I will be in Australia for two of the twelve months in the income year.
My tax-free threshold is:
= 13,464 + ((4,736 × 2) ÷ 12)
= 13,464 + 789.33
= 14,253.33
This means I will not pay tax on the first 14,253 of my taxable income for the income year.
For any taxable income over 14,253 I will start to pay tax at the rate of 19%.

2/
However on my May pay, I get the following:
My monthly salary is 11033.34
Taxable income would be 3198 + .39c on every dollar in excess of 10833.33
3198+ 78 = 3276.00
I think you're getting it a bit wrong. :)

You became a Permanent Resident, and also tax-resident, on 1 May.

Assuming you have no other income, anything you earn between 1 May and 30 June is your taxable income for the financial year.

You (and all residents) have a non-taxable amount of $18,200 for all income earned in the financial year.

After that point, any further income is taxed at 19c per dollar, up to $37,000.

If you earned 2 months salary by 30 June, and that was $22066, then reduce that by $18,200 as that much is not taxable. The balance is $3866, which is taxable at 19% - so your tax liability should be about $734.

However, this does not not include any other income, or any deductions you might have, etc.

The 2% Medicare Levy should not apply to you as you were not an Australian Resident for the full tax year.
 

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Discussion Starter · #4 ·
I think you're getting it a bit wrong. :)

You became a Permanent Resident, and also tax-resident, on 1 May.

Assuming you have no other income, anything you earn between 1 May and 30 June is your taxable income for the financial year.

You (and all residents) have a non-taxable amount of $18,200 for all income earned in the financial year.

After that point, any further income is taxed at 19c per dollar, up to $37,000.

If you earned 2 months salary by 30 June, and that was $22066, then reduce that by $18,200 as that much is not taxable. The balance is $3866, which is taxable at 19% - so your tax liability should be about $734.

However, this does not not include any other income, or any deductions you might have, etc.

The 2% Medicare Levy should not apply to you as you were not an Australian Resident for the full tax year.
Thank you for your reply!!
So yes great my tax liability should be about $734 and not 2 x 3276 as mentioned by ADP our payroll system.
Or does it mean we have to claim the 2x3276 - 734 end of June?
Thank you
 

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Thank you for your reply!!
So yes great my tax liability should be about $734 and not 2 x 3276 as mentioned by ADP our payroll system.
Or does it mean we have to claim the 2x3276 - 734 end of June?
Thank you
Your employer will most likely take out PAYG (Pay As You Go) tax for you, at the standard rate each month - calculated as if you had been employed and earning that rate of income all year.

When you do your tax return, you simply need to put in all the income, as shown on your PAYG Payment Summary, along with the amount of tax (also shown on your Payment Summary) that was deducted by your employer.

Your employer should give you your Payment Summary sometime shortly after 30 June.

When your tax return is assessed by the Australian Taxation Office, they will then send you a refund for any amount owing to you. (You can specify in your tax return what account you want any refund to be paid to.)

Of course, after June 30, the new financial year starts.

Your income for next year will be much higher, and the deductions your employer takes out then (presumably at the same or very similar level as now) will be better matched to your actual annual income - so you won't get this big kind of refund next year, although most people do get a small refund each year. :)
 

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Discussion Starter · #6 ·
Your employer will most likely take out PAYG (Pay As You Go) tax for you, at the standard rate each month - calculated as if you had been employed and earning that rate of income all year.

When you do your tax return, you simply need to put in all the income, as shown on your PAYG Payment Summary, along with the amount of tax (also shown on your Payment Summary) that was deducted by your employer.

Your employer should give you your Payment Summary sometime shortly after 30 June.

When your tax return is assessed by the Australian Taxation Office, they will then send you a refund for any amount owing to you. (You can specify in your tax return what account you want any refund to be paid to.)

Of course, after June 30, the new financial year starts.

Your income for next year will be much higher, and the deductions your employer takes out then (presumably at the same or very similar level as now) will be better matched to your actual annual income - so you won't get this big kind of refund next year, although most people do get a small refund each year. :)
Thanks a lot for the detailed answer!:)
Have a good day!!
 

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Tax refund question

Hi all. I migrated a little before mid this year and earned a little over 7000 AUD in June. Around 1500 was deducted in taxes. On filing my return I was expecting to get a full refund - but only got ~ 400 back. As part of my return I had declared my overseas income for the current tax year - up until April this year in my home country. When I called the tax office, they said my overseas income resulted in the reduction of refund. I'm wondering if I've filled up everything correctly and if anyone else had a similar situation.
 
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