Tax Tables

[TQO]

I was convinced of the "average" salary to "survive" on, and weighed up all the groceries, rent, expenses and such with a view to various suburbs and states ... until I viewed the tax tables!!

I don't know if I am looking at the right/wrong place, or calculating incorrectly, but it seems the taxing system, especially for those on temp visas is really high, and if you are earning below the $60k mark, it might well be quite tight, if not damn hard to survive on your Nett salary.

http://www.ato.gov.au/content/12333.htm

Can anyone elaborate on this....?

[Donovan83]

If you want an easy to use tool - www.paycalculator.com.au

[TQO]

Thanks Donovan - GREAT tool.

Still, it doesn't calm the nerves when you consider what you will be left with after Taxes ... might have to consider living in a camper van and eating eucalyptus leaves for two years

[AndreaL]

Don't panic!

You won't get taxed at the foreign resident rate, you will be taxed at the same rate as residents....if you look at the link for residency requirements, there is something that used to be called the 183 day rule.....if you are working in the country for more than 6 months in a financial year you are considered a "resident for tax purposes only".

Usually when your hubby starts work the payroll will calculate his tax based on his projected earnings for the year.

We never paid a cent more than we should have, i.e. the same as residents............now go and pour yourself a glass of wine, oh still to early, well I'll have one shortly for you

[AndreaL]

p.s. You can't live on eucalyptus leaves unless you are a koala or some other animal as they are toxic.......lol

[TQO]

Laugh Out Loud!

Thank you, thank you Andrea!

So pleased we don't have to live on poisonous leaves!! and the wine is in fact chilling - far too early to be drinking by most people's standards so I will settle for another coffee in the meantime

[AndreaL]

Glad I could give you some good news...I haven't had much of it lately, so hopefully I will get a bit back

[Donovan83]

The 183 day rule is a South African concept and is also hardly ever applicable. Most people misinterpret it as a "bright line" test.

What actually happens is, when you emigrate, you stop being a tax resident of the place you're leaving and start being a tax resident of the country you are moving to from the day you leave. It's a change of mindset, your tax residence is determined as where your true home is, ie, the place you would ordinarily return to. There is no requirement to be anywhere for a certain number of days, that would only be used if you did work and live amongst a variety of countries and where it wast not clear.

So in short, you would be taxed as a tax resident of Australia - note that your visa type is also not considered so you could be here on a 457 or on PR and you'd be taxed as a resident.

[AndreaL]

Donovan, when I first moved here in 2005 the language used by ATO was very different and that was when we were told about the 183 day rule, I see different language and scenarios are used now.

A
person is resident in Australia if any of the
following situations apply:

• He
  is domiciled in Australia and does not have
  a permanent and indefinitely continuing place
  of abode abroad;
  
• He
  is not domiciled in Australia but has been in
  Australia either continuously or intermittently
  during the fiscal year for 183 days or more
  (unless he can satisfy the Commissioner that
  his usual place of abode is outside Australia
  and that he does not intend to take residence
  up in Australia and does not intend to live
  in Australia for more than 2 years).
  
• The
  resident goes abroad to work but his term of
  employment abroad is less than 2 years and he
  intends returning to Australia

ATO still refer to the 183 day rule however the interpretation has changed somewhat from what I can see

http://www.ato.gov.au/individuals/content.aspx?doc=/content/36270.htm

What is the 183 day rule?

This is the second statutory test.

Under this test, if you are actually present in Australia for more
than half the income year, whether continuously or intermittently, you
may be said to have a constructive residence in Australia unless it can
be established that:

• your usual place of abode is outside Australia
• you have no intention to take up residence here.

Note:

In this test, we must be satisfied that your usual place of abode is outside Australia, whereas the first statutory test (domicile) requires us to be satisfied that your permanent place of abode is outside Australia.

TQO will most likely be coming over on a 457, but will still be classed as a resident for tax purposes.............................maybe I need to change my language.......lol......I'm getting behind the times.

[Deon]

The majority of countries worldwide acknowledge income earned on the residency basis. Therefore, if you migrate to Australia with the intend to make Australia your home, you will be a resident for tax purposes from the day you arrive in Australia. The fact that you are in Australia on a PR visa or a 457 visa does not influence your residency position. If you are in Australia on a PR visa, you have to declare your worldwide income in Australia from the first day you have arrived. For the 457 visa, there is an exception that you will only be taxed in Australia on your Australian income as long as you are on the 457 visa.

For tax purposes it is very easy to be classified as a tax resident of the new country as that is easily determined by your intend. The problem is to proof that you are NOT a tax resident of the original country anymore. At this point you need to look at the tax treaty (double taxation agreement) between the two countries to determine which country will have the right to tax you on your world wide income. In the first year of migrating you can end up being a resident of both countries although most of the treaties have a lockout clause to ensure that you will be a tax resident of only one of the two countries.

Example: A person migrate from South Africa to Australia on a PR visa on 30 April 2013 with the intend to make Australia his home.Till this date, he earned a salary in RSA as well as investment income which will continue beyond the migration date. In Australia he will be earning a salary from 1 May 2013. Tax-wise, income will be declared for tax purposes as follows:

In RSA. Tax year from 1 March 2013 to 28 February 2014.
Salary till 30 April 2013 plus all investment income earned from 1 March 2013 to 28 February 2014 will be declared and taxed in RSA. All tax due will be payable to SARS. There is no need to declare the salaries earned in Australia on your RSA tax return. According to the tax treaty salaries and wages are always taxed in the country where they are earned except for a few exclusions.

In Australia. Tax year from 1 July 2012 to 30 June 2013.
Salary earned in Australia from 1 May 2013 till 30 June 2013 as well as the RSA investment income earned from 30 April 2013 to 30 June 2013 must be declared and taxed in Australia. As the RSA investment income was already taxed in RSA, the tax treaty will give relief for tax paid in RSA on the investment income for the period 30 April 2013 to 30 June 2013. This means that the pro-rata amount of tax paid in RSA relating to this part of the investment income will be offset against the tax payable in Australia on that investment income to ensure that he will not be taxed twice on the same income.

Migrant arriving on a 457 visa
If we use the same example as above, the migrant will declare his RSA income only in RSA and the Australian income only in Australia.

Although this is a simple example, situations may arise that will not be this simple. Therefore, if in doubt, rather consult a tax agent.

Edited June 15, 2013 by Deon

[TQO]

Thanks Deon, this is very helpful!

[Donovan83]

Donovan, when I first moved here in 2005 the language used by ATO was very different and that was when we were told about the 183 day rule, I see different language and scenarios are used now.

ATO still refer to the 183 day rule however the interpretation has changed somewhat from what I can see

http://www.ato.gov.au/individuals/content.aspx?doc=/content/36270.htm

TQO will most likely be coming over on a 457, but will still be classed as a resident for tax purposes.............................maybe I need to change my language.......lol......I'm getting behind the times.

Ah right - I wasn't aware of the old rules

I'm happy as long as I no longer have to pay any tax towards those savages ransacking RSA. I want no part in funding their antics