09 Oct 2024
Filipinos make up the 5th largest group of migrants in Australia. Many Filipinos are moving to Australia because of the country's developed economy and better employment opportunities. Filipinos make up 1.2% of the total population of Australia. They generate income and send money online to Philippines from Australia.
Living in Australia comes with many advantages but also involves responsibilities. One of the most important is understanding and managing taxes. If you're a Filipino living and working in Australia, it is crucial to know how the tax system works. Its understanding is very important for keeping up with your responsibilities and avoiding any penalties. It can also help you take advantage of any tax benefits that may apply to you.
This article discusses the essentials of the Australian tax system, including your residency status, taxable income, deductions, the best money transfer platform and how to file your tax return as a Filipino living in Australia.
The Australian Tax Office (ATO) determines tax residency based on the length and purpose of your stay, which impacts how you are taxed. Being classified as a tax resident means you are required to declare all your global income, including any income from the Philippines. If you still have strong connections to the Philippines, like owning property or investments, it’s essential to know how these can affect your taxes in Australia. Additionally, when making money transfer from Australia to Philippines, using reliable services like ACE Money Transfer can help you ensure your family receives financial support without unnecessary deductions.
The criteria for being considered a tax resident in Australia generally include:
If you have been in Australia for over 183 days in a financial year, you may be classified as a tax resident.
Having a permanent home or significant connections in Australia can also lead to tax residency.
If your main business or employment is based in Australia, this can establish your residency status.
As a non-resident, for tax purposes, you only pay taxes on income sourced from Australia, such as employment earnings. Importantly, non-residents are not eligible for the tax-free threshold, meaning that all income will be taxed from the first dollar earned.
Different forms of income must be declared on your Australian tax return, and each type may be taxed differently. Understanding what qualifies as taxable income is important for proper reporting and compliance.
The salary and wages earned from a job in Australia are taxable. If you are working full-time, part-time, or even as a contractor, you must report this income in your annual tax return.
If you’re self-employed or run a business, you must declare all income related to your business activities in Australia. This includes freelancers and independent contractors.
As a tax resident, all foreign-sourced income, such as investments, property, or business activities in the Philippines, must be reported in Australia. For instance, if you receive rental income from a property in the Philippines, this needs to be declared in your Australian tax return. However, non-residents only need to declare Australian-sourced income, and any income from the Philippines or other foreign countries remains outside the scope of Australian taxes.
Australia employs a progressive tax system, where individuals with higher incomes pay a higher percentage of tax. The tax rates for 2023-2024 for residents are as follows:
Income Range | Tax Rate |
$18,201 to $45,000 | 19% |
$45,001 to $120,000 | 32.5% |
$120,001 to $180,000 | 37% |
Over $180,000 | 45% |
Residents who earn less than or equal to $18,200 are not supposed to pay income tax.
On the other hand, non-residents pay 32.5% from the first dollar earned up to $120,000 and then higher rates beyond that.
Income Range | Tax Rate |
$0 to $120,000 | 32.5% |
$120,001 to $180,000 | 37% |
Above $180,000 | 45% |
One of the concerns Filipinos may face is the risk of being taxed on the same income in both Australia and the Philippines. Fortunately, Australia and the Philippines have signed a Double Taxation Agreement (DTA), which helps avoid this issue. The DTA outlines how different types of income (e.g., wages, interest, dividends) are taxed, ensuring that you won’t pay tax twice on the same income.
If you are a tax resident of Australia but have income from the Philippines, you can claim Foreign Income Tax Offsets (FITO), which allows you to receive a credit for taxes paid in the Philippines. This offset helps avoid paying taxes in both countries for the same income. Additionally, when using an online money transfer from Australia to Philippines, such as ACE Money Transfer, you can ensure that your family receives the funds quickly and efficiently without unnecessary deductions.
All tax residents must file an annual tax return, typically due by October 31st each year. In your return, you must declare your total income, including foreign earnings, and claim all eligible deductions. The process of filing can be done online using myTax, a simple platform provided by the ATO.
Failing to file your tax return or providing inaccurate information can lead to penalties. The ATO takes tax compliance seriously and imposes fines for late submissions, under-reporting income, or failing to declare foreign income.
Common penalties include:
If you miss the filing deadline, you may face a failure to lodge on time penalty, which can accumulate the longer your return is overdue.
If underpayment or non-disclosure of income is detected, interest charges and fines may be levied on top of the owed tax amount.
This can affect your ability to send money back home, as any financial issues may complicate your financial situation. To avoid penalties, it’s important to stay up to date with your tax filings and seek professional help if you have doubts about your tax responsibilities.
Filipinos in Australia need to understand their tax responsibilities. Knowing your residency status, applicable tax rates, and how to file tax returns helps you manage obligations effectively and avoid penalties. This knowledge empowers you to make informed financial choices that benefit both your life in Australia and your family in the Philippines.
Also, don't forget the purpose of leaving your home country. Sending money home is a way to support your loved ones. ACE Money Transfer makes it easy to send money to Philippines from Australia. With their competitive rates and reliable service, you can ensure your support reaches your family without extra deductions. Stay informed about your tax duties and use efficient money transfer options. This way, you can thrive in Australia while staying connected with family in the Philippines.
Tax residency in Australia refers to your status as a taxpayer, which determines how you are taxed. If you meet specific criteria, such as staying in Australia for over 183 days or having a permanent home here, you may be classified as a tax resident.
You can file your tax return onine using the Australian Taxation Office (ATO) website or through registered tax agents. It’s esselntial to gather all necessary documents, such as your income statements, etc.
Failing to file your tax return can lead to penalties, including fines and interest on any unpaid taxes. The ATO may also take further action to recover the owed amounts, which can complicate your financial situation.
If you cease to be an Australian resident, you must declare your foreign income for the time you were a resident. After becoming a non-resident, you only need to report income sourced from Australia.
Yes, you can receive income from the Philippines. However, if you are a tax resident in Australia, you must declare this income on your tax return, as you are taxed on your global income.
