If you employ backpackers who are in Australia on a 417 or 462 working holiday visa there are some things you’ll need to do following the tax rate changes that...
If you are a high income earner, you have to pay for the higher tax. However, there are legal approaches to reduce your liability to pay taxes or increase refundable amount.
Firstly, you can apply deductions on the work-related expenses against your income. You will not receive the amount back but it will reduce your taxable income and ultimately reduce your tax liability or increase refunds amount. The other option is to apply for tax offset. In this case it will reduce your tax liability hence has a greater effect on the outcome. For instance, if tax of $1,000 has been applied on your income and you are eligible to apply for a tax offset of $300, you will only have to pay for $700.
Zone offset has been made to benefit the ones who reside or work in the certain remote areas. To qualify for this tax offset, you must have lived or worked in a remote area (not necessarily continuously) for 183 days or more during the current financial year. However if you lived in a zone for less than 183 days in the current financial year, you may still be able to claim a tax offset as long as the total of the days you lived there in the first year and in the current year is 183 or more.
ATO has classed 4319 remote areas as Zone A, Zone B, and Special Areas. If you have lived or worked in the areas that are included in the list, you will be able to claim a tax offset of $338, $57, and $1,173 respectively. As it will affect total tax payable directly, stricter standards are applied therefore more attentions need to be paid when applying for a tax offset.
Also supporting documents should be ready to provide if you are claiming a zone tax offset. For example, tickets that can prove you have gone into the area and came out such as flight, train, bus tickets can be a proof of residence in the remote area. Also, first and last pay slip that prove you have worked for more than 183 days in the area can be supporting document as well. Otherwise, you can request a letter to employer states that you have worked for more than 183 days in the area. These are only examples therefore if any documents can prove the period, it can be used as a source document.
This column discussed only general matters and it may be applied differently depending on the individual’s circumstances. Therefore, for further enquiries or consultations, it is advisable to discuss with professional tax agents or accountants to avoid any problems that may be associated due to the lack of knowledge.
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