Whether you’re an Australian citizen or from overseas, adhering to Australia’s tax file number declaration and completing your taxes correctly can be a complicated task. Completing your taxes correctly, however, is obviously hugely important since you want to avoid filling out your documents incorrectly, which could result in overpaying or underpaying your taxes, ultimately creating more stress and work for yourself.
So how do you correctly fill out your tax file number declaration? While we are unable to legally offer advice surrounding taxes, we can clear up some details surrounding your tax file number declaration. If you’re struggling to fill out your taxes and you’re on a working holiday visa, this blog is for you. If you're unclear about working under an ABN versus working under a contractor, please find some insightful content here.
What is a TFN?
A Tax File Number (TFN) is a declaration of your tax status, which should be given to your employer after you’ve begun working for them. If you are working in Australia and over the age of 18, you are required to complete and submit a Tax File Number Declaration. Please refer to this document for your reference. You’ll notice that pages 2, 3, and 4 take you step-by-step through completing the document. We highly recommend reading this document extremely carefully before you begin filling it out.
Working Holiday Makers
On the 1st of January 2017, the legislation changed the way that working holiday makers are taxed. To be clear, a working holiday maker includes the following visas:
- Working Holiday visa (subclass 417)
- Work and Holiday visa (subclass 462)
For more information about working holiday makers, we invite you to visit ato.gov.au/whm to ensure that you’re absolutely certain of which visa you fall under. After you’ve checked your visa status, you’ll notice that the tax file number declaration form asks whether you’re one of the following in question number seven (#7), and asks you to “select only one”:
- An Australian resident for tax purposes
- A foreign resident for tax purposes
- A working holiday maker
This question (#7) should be carefully selected, as it determines how you will be taxed. As the document states,
“Generally, we [Australian Government, Australian Taxation Office] consider you to be an Australian resident for tax purposes if you:
-have always lived in Australia or you have come to Australia and now live here permanently
-are an overseas student doing a course that takes more than six months to complete
-migrate to Australia and intend to reside here permanently.”
If you are not a working holiday maker, then you are an Australian resident for tax purposes or you are a foreign resident for tax purposes. Again, we recommend visiting the tax declaration form and visit page #2 to find a definition of each option.
If you are still unsure about which option to choose, you should always consult the Australian Taxation Office or a licenced tax accountant. They will be able to help you with any questions or concerns.
Once you’ve selected one of the options for question number seven (#7) on the tax file number declaration form, you’re ready to answer whether you want to claim the tax-free threshold or not.
Claiming the Tax-Free Threshold
Another question within the tax file number declaration form which often causes some confusion is number eight (#8) surrounding the tax-free threshold. Ultimately, if you are a working holiday maker, you cannot claim the tax-free threshold.
We encourage you to visit page #3 to find a definition of each option prior to making your selection to ensure that you fully understand the parameters of the question.
How to Check Your Tax Declaration
When you receive your pay as you go (PAYG) summary statement (typically you would receive this around the month of July), this is where you are able to verify your tax declaration status on your tax codes.
On your PAYG summary, if it has an “S” code next to wages, this means that you have declared yourself as an Australian resident for tax purposes and the Australian Taxation Office will recognise you as such.
On your PAYG summary, if it has an “H” code next to wages, this means that you haven’t updated as a working holiday maker to your TFN declaration, and your employer has no way of knowing this.
If you’re not sure how to obtain your PAYG summary statement, you can also log on to your myGov online portal to verify your PAYG summary.
What Happens If You Fill Out Your Tax Declaration Incorrectly
If you filled out your tax form incorrectly, you will consequently be taxed at the incorrect rate. In the event that you filled out your taxes incorrectly, however, don’t stress. You can fix it! It’s important to keep in mind that since your taxes are highly personal and legally binding, you and only you are responsible for your own tax declarations. This means that your employer cannot change it for you and neither can the Australian Taxation Office.
So how do you make an edit? Simply log onto your online employee portal and you can verify and make any changes. If you're not sure what your online employee portal is, simply ask your employer. (Tip: For BENCHMARQUE employees, this is Employment Hero).
Wrapping It Up
We hope that this blog provided some clarity for your tax declaration. If there is still some unclarity surrounding your taxes, we highly recommend consulting the Australian Taxation Office or a licensed tax accountant, given the highly sensitive content within your taxes.
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