The annual tax season is approaching again. It is understood that in fiscal year 2018, the Australian Revenue Service (ATO) has to pay strict attention to other job-related expenses reported by taxpayers (Other Work-related Expenses),). That is to say, to achieve reasonable tax avoidance through other expenditures, we must preserve all kinds of evidence.
Not only that, ATO has just launched a large amount of money developed DATA Matching system, through which ATO can compare its own data with immigration data, and bring individuals out of the country, bank cross-border remittances, and so on into the scope of the audit. An in-depth investigation of the tax situation of Australian visa holders.
Once again, if you have a legal visa in Australia, even international students will be required to file tax returns as long as they have experience at work.
As we all know, Australia is a high-welfare and high-tax country, how to minimize the tax, you need to know the following:
Comment 1: Australian tax citizens learn about it
Australian citizens ≠ Australian tax citizens!
Tax citizens simply define tax obligations and rights from a tax perspective, and are not directly related to whether they own Australian citizenship and visa categories. In short, even if a Chinese citizen with a Chinese passport comes to Australia to study, work, do business, invest, and so on, you are likely to be classified as an Australian tax citizen; On the contrary, an Australian citizen who holds an Australian passport does not count as an Australian tax citizen if he does not live in Australia for a long time.
The Australian Inland Revenue Department defines whether you are an Australian tax citizen according to the following points
-> residence test: do you mainly live in Australia, including whether you have assets in Australia, open a bank account, have self-housing, and so on. The definition of this test is vague, so there are a few more specific tests.
-> Family test: is your home in Australia?
-> 183 days test: do you live in Australia for more than 183 days (half a year) throughout the fiscal year.
Even if you do not meet the first residence test, as long as you meet any other, will be defined as an Australian tax citizen. Here`s the point. What`s the difference between Australian tax citizens and non-tax citizens in the tax system? Look at the following table:
The difference between tax Citizen and non-tax Citizen
A non-tax citizen has a tax-free amount of $18200 in income, and then the tax rate increases from 19% to no tax-free amount, and all income is subject to tax. Tax rate starting from 32.5% global income tax on income in Australia only public health tax is required not public health care tax Australian interest income is calculated according to individual income tax rate Australia interest income collection is based on the individual income tax rate in Australia interest collection is based on the individual income tax rate. To charge a 10% tax rate on assets added tax, Tax policies such as tax exemption for self-housing, low-income credits, and so on, do not enjoy any tax credits
After talking about the definition of Australian tax citizen, and the difference between tax citizen and non-tax citizen in tax system, let us explain two very important points, namely, the overseas income of tax citizen, and the Australian income of non-tax citizen.
Overseas income of Australian tax citizens
I declare taxes in Australia, what are the income and assets of other countries?
All overseas income of Australian tax citizens is taxed in Australia. Australia has tax agreements with most mainstream countries, including China, the United States, Canada, etc. The IRS exchange income and property information between the two countries. If your income in these countries has already been taxed in your home country, you will still be required to report back to the Inland Revenue Department when filing your taxes in Australia, but will receive a corresponding tax credit. Special attention should be paid to the fact that there is currently no tax agreement between Hong Kong and Australia.
If you are an Australian tax citizen, your shares, funds, interest, rent, home sales, wages and so on in other countries are theoretically taxable in Australia. The rule may sound unreasonable, and in practice, the IRS does not have a good way and enough capacity to monitor the average citizen`s overseas income. Although the two congresses share information, most of them are for large amounts of cases.
The Australian Inland Revenue Department is now examining citizens` overseas income mainly by monitoring Australian local bank accounts: banks will report this information to the Inland Revenue Department as long as your personal Australian local bank account receives a large amount of overseas transfers. The Inland Revenue Department will ask you to explain where the money came from and whether it came from overseas income.
The expert`s advice is to keep documents when transferring money overseas, and the Inland Revenue Department will ask for a certificate of relationship between the transferer and you (parents, relatives, etc.) and prove that the money is not your personal income. If you can`t prove it, the Inland Revenue Department will use the money as your personal overseas income and ask you to make up the tax at the personal tax rate of that year.
Another suggestion is to avoid frequent overseas transfers as often as possible: if there is a similar transfer every once in a while, it is likely to be suspected of your continuing income overseas, and it will be cumbersome to explain. So avoid it if you can avoid it.
Finally, if you need to transfer a large amount of money to Australia, and it is not transferred from your personal account at home, we recommend that you do not use the personal account here to receive the money. A better option: you can set up a simple trust or company to receive the money, which is much safer than the personal one.
If you are a former Australian tax citizen who now plans to leave Australia for a long time to live and work abroad, then you will become a non-Australian tax citizen after you leave and your income overseas will not need to be declared in Australia. But your income in Australia, such as interest, dividends, rent, etc., is still subject to tax returns and will be taxed at a higher rate.
Australian income of non-Australian tax citizens
I am an Australian citizen but now live overseas. Do I need to file tax returns in Australia?
Overseas income of non-Australian tax citizens is not required to be reported in Australia, but local income (such as rent, dividends, interest, etc.) is required to return and pay taxes in Australia. If you have a property to rent or sell in Australia, or if you have an Australian deposit or stock that generates interest and gains in value, you may need to apply for an Australian tax number and return tax annually. It is important to note that even if you do not have any Australian income to declare, if you have an Australian tax number, you still need to make a zero declaration to the Australian Revenue Office every year.
For the following categories of income, we are separate:
-> real estate: in addition to applying for FIRB when overseas citizens buy a house, last year Australia`s government added overseas Stamp Duty.. If you own a property in Australia and rent it, you need to apply for an Australian tax number and report your property income annually; if your property is sold, you will also have to pay a value added tax on your assets. If you have purchased a commercial property for rent, it is likely that in addition to applying for an individual`s tax number, you will need to apply for an ABN and a registered GST.
-> interest: if you are a non-tax citizen who only has interest income in Australia, you do not have to apply for a tax number, which will automatically be withheld by the bank of 10% of the tax payable before it is issued to you.
-> share dividend: as with interest, if you are a non-tax citizen and only have stock dividend income in Australia, you do not have to apply for a tax number, which will be withheld in different proportions according to your country before it is paid to you.
-> wages: if you are a non-Australian tax citizen, but if you receive a salary from an Australian company, the company should withhold taxes at the rate of overseas citizens when paying you wages, and you will also be required to file annual tax returns.
For overseas citizens who want to invest or do business in Australia, it is best not to invest in the name of an individual, but also to set up Australian companies or trusts to invest. This benefit is not only to enjoy a much lower tax rate than that of overseas citizens. It also has the function of asset protection. Unlike at home, in Australia`s legal environment, asset purchases in individual names are the most risky compared to companies, trusts, etc.
II: ways of reasonable tax avoidance
There are policies and policies, according to the law, how to minimize the legal tax is very important, good operation can save a large amount of money.
1. Investment in Australian real estate
If you already have an investment plan, consider paying bank interest in advance for the next year to get immediate tax breaks
Other houses with depreciated Depreciation, set-up Equipment facility, need to maintain and repair the part of Repair and maintenance, administrative expenses (Management fees) and rent loss (Loss of rent) can be used for tax deductions.
2, Margin Lending of the stock
The stock`s Margin Lending is a magnifying investment that uses the stock`s Margin Lending for you to pay 25% for yourself and 75% for the bank. The advantage is that Margin Lending interest is tax deductible. Suppose you earn 15% Margin Lending on your stock, if Margin Lending interest is 9% and your marginal tax rate is 45%, then you actually earn 15%-9%x0.55 = 10.05%.
3, Salary Sacrifice goes to a pension account
If you accidentally make a profit in the Margin Lending of the stock, an emergency is to raise the percentage of your salary Salary Sacrifice by paying only 15% of the tax on the. Salary Sacrifice portion, otherwise you will have to pay your marginal tax rate for the year.
4, Family Fund
Set up a family fund, especially a business operator. In this way, the profits of the business can be shared among each member of the family.
5. Husband and wife tax avoidance
If the husband and wife have a higher or lower income, they can get a tax benefit of up to $540 through the purchase of a spouse pension for the lower side by the high side, or change the property owned by both sides on average to a higher proportion of the property. Or the high side for the low side to pay household wages (with written certificates), to reduce the high tax rate and save hundreds of thousands of dollars.
6. Tax savings for labourers
Dues, sunglasses, anti-skid shoes, etc. Enroll in courses related to working. Tuition fees include self-taught textbooks, reference materials, lectures, driving fees, etc.
Meals for overtime work. The fare for a second job, the fare for a meal, etc. Temporary worker on call telephone fee, mobile phone fee, subscription fee, etc. Sign up for a small business in place of your personal name to do the same job.
All these ways can help you get your tax rebate. Generally speaking, single-career workers, there are not many items to report taxes, but if involved in diversified operations, there will be rich and colorful tax rebate space, such as part-time stock trading, more than 40 times a year, investment in tens of thousands of funds.
It is best to make money, if you lose money, you can report losses, as a negative combination in your annual income and less tax, equivalent to having the Inland Revenue Bureau buy you part of the order.
7. Tax avoidance for small businesses and home offices for self-employed persons or families
There are a lot of reasonable expenses such as computer upgrade, maintenance, battery, car maintenance, insurance, gasoline, hospitality, travel expenses. Household equipment depreciation, wear and tear, partial lighting, heating, Internet access, cleaning, partial rental, telephone, mobile phone, postage, stationery, partial purchase fee, industry newspaper magazine, membership fee, etc., can be reasonably declared tax rebate.
Ask your accountant for specific tax returns that you may not be aware of.
8, how to pay less value added tax on investment
Try to live in the largest value-added Australian property (if you have a few Australian properties). Reasonable arrangement of investment housing for a period of time. Assets owned (including shares) can be sold after as much as a year and receive a 50% discount.
Choose one of the two methods of calculating value added tax (VAT) for year-by-year calculation and average calculation. Try to sell your investment house if your annual income drops sharply (such as retirement, resignation, illness, injury at work). Invest in pre-paid expenses, liabilities or tax savings, or transfer income to your pension contributions, with only a small amount of money drawn to meet your living. These can pay less value added tax.
Transferring assets below market capitalization between families does not reduce VAT. If you have an investment in Australian real estate and you want to retire, remember to transfer it five years before you plan to retire, otherwise you will still have to account for your retirement assets.
9. Deferral of income and advance payments
Before June 20 each year, negotiate with your employer to make sure that retirement benefits, severance payments, bonuses, annual leave payments, long-term service fees, sick leave fees, and so on, have a certain amount of time and flexibility income to be recorded after 7.1. Tax payments for these fees can be delayed by one year and provide an opportunity to further tax avoidance in the following year, which can also be understood as a one-year interest-free loan from government to you.
Similarly, there are many fees that should have been paid later than 7.1, such as: professional press fees, annual industry fees, business-related bills, annual insurance premiums for cars, interest on loans for the next year, Some interest-prepayable investment products, such as borrowing money, charitable donations, donations to children`s schools, etc., are paid off before 6.30, and you can get a tax rebate this year, a year earlier.
10, several notable Australian tax systems
-> 50% of child care rebates.
-> people under 75 years of age: government will subsidize up to $1500 of your super co-contribution, into your pension account if you buy a pension for yourself before 6.30.
High-income people can ask your employer to transfer some of their pre-tax income to your pension account, reducing your marginal tax rate and saving money (it is common for Westerners to do so).
-> overseas income should be listed separately from domestic income and enjoy a low tax rate of only 10%. The government has noticed that mainland Chinese people do not report overseas income (such as pensions, mainland property rents, Chinese stocks, and foreign exchange treasure) and find out that fines outweigh their losses.
Similarly, it is better to invest Australian stocks, real estate, funds, bonds and so on with overseas income or support from relatives and friends than to invest their own Australian income. You can use the method of writing debit notes between relatives and friends, and the expenditure can be refunded. Income also enjoys a low tax rate of 10%. Don`t forget the return of the bank`s regular interest income, which may not have much money, but the IRS is easy to find out, causing unnecessary trouble. Remember not to forget to report property depreciation every year (new house can be reported for 40 years), this is a large tax deduction, as well as decoration fees, four times a year to inspect your investment property transportation costs.
-> from July 01, 2004, workers over the age of 55 will automatically receive a tax refund of up to $500 from government. Those earning less than 20, 000 a year can automatically receive a subsidy of up to 235 yuan from government, and can also be exempted from a 1.5 percent annual national health tax. So strive to reduce your annual income, you can not only pay less tax, but also enjoy government subsidies.
-> the portion of medical expenses above $1500 a year can be refunded by your private health care company or MEDICARE.
-> if you pay your tax but you don`t get the boss`s proof for reasons such as loss, error, prevarication, you can file it directly with the IRS yourself, just fill in the form statutory declaration..
-> people who earn more than 50,000 a year must buy private health insurance, or you may not know if you have been fined.
epilogue
Many people have directly handed tax returns to accounting firms for operation. Although it is also very convenient, it is suggested that we should also understand the way in which Australia`s legal tax avoidance is done, especially in terms of consumption evidence. All expenses on weekdays must be kept in invoice,. These are the basis for tax deductions!
