As an American currently living in Australia on a Work and Holiday (462) Visa, I have a small but significant correction to make: foreigners on a 462 Visa aren’t actually able to file as residents for tax purposes.
Which means that rather than paying 0% tax, I’m paying about 32% tax. (And that’s a lot, but it’s still better than what I’d be paying if I didn’t have an Australian tax file number. If you don’t have one, you can end up paying up to 45%.) I have yet to find out if I’ll get any of that money back when I leave.
When I first got here, I was hopeful that maybe I did qualify as a resident for tax purposes. After all, it says on the Australian Tax Office’s site that you are “generally considered an Australian resident for tax purposes” if “you have been in Australia continuously for six months or more, and for most of the time you have been in the same job, and living in the same place.” (Source: http://www.ato.gov.au/individuals/content.aspx?doc=/content/64131.htm). And that’s exactly what I planned to do. But maybe what that actually means is that you need to have already lived in Australia for more than 6 months at the time of application. I don’t know. But I do know that for whatever reason, when I applied for a tax file number, I was informed that I don’t qualify as a resident for tax purposes. Please correct me if the Australian government and I are wrong, because I would love to not have to pay so much in taxes, but this has been my experience.
Of course, what’s left after almost a third of my money goes to the government is still more than I made at my minimum wage job in the U.S. (I get to keep about $12 AUD an hour, compared to $7.40 USD an hour, and the Australian dollar is still a little bit stronger), so it’s still a significant step up. Especially because they pay double on public holidays and Sundays, which my job in the U.S. didn’t.
However, since food and housing and laundry and everything costs more in Australia (granted, I’m living in North Melbourne, not Alice Springs, so maybe it’s different out there) I still end up using almost all of my income on basic living expenses, even sharing an apartment and thus splitting the rent with two friends.
And as someone else pointed out, Work and Holiday Visas only last a year and are non-renewable, so if you want to stay longer, you’ll need another one after that. And those can get expensive. (And just as a side-note, the cost of applying for a Work and Holiday Visa has gone up since this article was written. It’s currently $365.) Source: http://www.immi.gov.au/allforms/pdf/990i.pdf
So I’m definitely not going to discourage anyone from coming to live and work in Australia on a Work and Holiday Visa. Australia is lovely, and it’s been great for me, but it’s not a sure-fire way to get rich—unless you can get a visa that does allow you to file as a resident for tax purposes, or a job that pays more than minimum wage. But finding an upper-level job is kind of tricky when you’re only allowed to work for any one employer for a maximum of 6 months, according to the work restriction on a 462 visa. There are plenty of industries that employ backpackers and holidaymakers, but not every employer is going to hire a short-term employee. So I didn’t want anyone to come here on a Work and Holiday Visa based on the information in this article and then get blindsided.
As an American currently living in Australia on a Work and Holiday (462) Visa, I have a small but significant correction to make: foreigners on a 462 Visa aren’t actually able to file as residents for tax purposes.
Which means that rather than paying 0% tax, I’m paying about 32% tax. (And that’s a lot, but it’s still better than what I’d be paying if I didn’t have an Australian tax file number. If you don’t have one, you can end up paying up to 45%.) I have yet to find out if I’ll get any of that money back when I leave.
When I first got here, I was hopeful that maybe I did qualify as a resident for tax purposes. After all, it says on the Australian Tax Office’s site that you are “generally considered an Australian resident for tax purposes” if “you have been in Australia continuously for six months or more, and for most of the time you have been in the same job, and living in the same place.” (Source: http://www.ato.gov.au/individuals/content.aspx?doc=/content/64131.htm). And that’s exactly what I planned to do. But maybe what that actually means is that you need to have already lived in Australia for more than 6 months at the time of application. I don’t know. But I do know that for whatever reason, when I applied for a tax file number, I was informed that I don’t qualify as a resident for tax purposes. Please correct me if the Australian government and I are wrong, because I would love to not have to pay so much in taxes, but this has been my experience.
Of course, what’s left after almost a third of my money goes to the government is still more than I made at my minimum wage job in the U.S. (I get to keep about $12 AUD an hour, compared to $7.40 USD an hour, and the Australian dollar is still a little bit stronger), so it’s still a significant step up. Especially because they pay double on public holidays and Sundays, which my job in the U.S. didn’t.
However, since food and housing and laundry and everything costs more in Australia (granted, I’m living in North Melbourne, not Alice Springs, so maybe it’s different out there) I still end up using almost all of my income on basic living expenses, even sharing an apartment and thus splitting the rent with two friends.
And as someone else pointed out, Work and Holiday Visas only last a year and are non-renewable, so if you want to stay longer, you’ll need another one after that. And those can get expensive. (And just as a side-note, the cost of applying for a Work and Holiday Visa has gone up since this article was written. It’s currently $365.) Source: http://www.immi.gov.au/allforms/pdf/990i.pdf
So I’m definitely not going to discourage anyone from coming to live and work in Australia on a Work and Holiday Visa. Australia is lovely, and it’s been great for me, but it’s not a sure-fire way to get rich—unless you can get a visa that does allow you to file as a resident for tax purposes, or a job that pays more than minimum wage. But finding an upper-level job is kind of tricky when you’re only allowed to work for any one employer for a maximum of 6 months, according to the work restriction on a 462 visa. There are plenty of industries that employ backpackers and holidaymakers, but not every employer is going to hire a short-term employee. So I didn’t want anyone to come here on a Work and Holiday Visa based on the information in this article and then get blindsided.
Did I meet you at the Less Wrong meetup in December/January?