Do you need to pay tax in Australia?

The short answer is yes! If you’re earning money or spending money in Australia, you need to pay tax to contribute to the Australian economy. Basically, international students are treated as Australian residents for tax purposes (unless your course is less than 6 months long).

There are two main ways you’ll pay tax: goods and services tax (GST) and income tax.

GST is a 10% tax that is applied to almost everything you buy. Don’t worry, you don’t have to calculate this yourself – any prices displayed by shops are required by law to include GST. This means that you’ll automatically pay GST whenever you need to, so it’s easy.

Income tax is collected from any wages or salary earned in Australia, such as wages from a job or money earned from a business. If you’re an employee, your employer will typically deduct tax from your wages before you get paid. If you’re self-employed, you’ll need to pay your own tax.

What’s a tax file number?

A tax file number is a unique number that is used by the Australian Taxation Office to identify you. It allows you to:

• Open an Australian bank account
• Be paid income
• Pay tax on your income
• Lodge a tax return

It’s free of charge to get a tax file number – just visit the Australian Taxation Office website.

What’s a tax return?

If you’re an Australian resident for tax purposes, you have to lodge a tax return each year. This is a summary of income you have earned and tax you have paid over the tax year. Based on your tax return, the Australian Taxation Office will check if you have paid the right amount of tax – then you might be owed a small refund (if you have overpaid) or you may now have a small debt (if you underpaid).

Don’t worry, you won’t get in trouble if you’ve underpaid or overpaid – the Taxation Office just ensures that everything is fair and correct.

You can lodge your tax return yourself or use a third-party like an accountant.

Typically, you lodge a tax return soon after the tax year ends in June. However, if you’re leaving Australia, you’ll need to lodge a final tax return whenever you leave.

What’s the tax-free threshold?

The tax-free threshold refers to the amount of money you can earn before you need to start paying tax on it. This means that low-income earners pay less tax than those with higher incomes. The tax-free threshold is approximately $18,200 per year.

What’s the Medicare Levy?

Medicare is Australia’s public health system. Australian residents pay for it with the Medicare Levy.

However, international students typically have private health insurance (e.g., Overseas Student Health Cover) instead of being eligible for Medicare. If this is the case, you’ll be exempt from paying the Medicare Levy.

What’s superannuation?

In Australia, your employer doesn’t just pay your wages; they also have to put extra money into a special account for your future, called superannuation (or “super” for short). Think of it as a government-regulated investment account to help people save for retirement.

That money is invested in things like shares and property to help it grow over time. Don’t worry, these investments are managed by professionals and follow strict rules to keep your money as safe as possible.

If you stay in Australia long-term, you generally can’t touch your super until you’re around 65. But if you’re an international student and planning to head home after your studies, you can apply to get your super back as a one-time payment after you leave. This is called a Departing Australia Superannuation Payment (DASP), and it’s worth knowing about so you don’t miss out!

For more information about the Australian tax system and how it applies to you, visit the UC Tax Clinic. The clinic is led by UC students and provides free tax services and advice for eligible members of the Canberra community and surrounding areas.