Aug 8, 2011

Taxes and the Australian expat

I will never complain about having to fill up my Borang B again.

It's tax time here, and taxes are so, so complicated. The rules are convoluted, abundant and intertwined with each other, with more layers than a V8 cake and more surprises than a dessert at Quay (sorry, still on Masterchef speak). And the tax rate's a lot higher.

Hey, although it's higher, you get more benefits, right?  Expats (on a 457 visa) pay the normal tax rates like everyone else but are not eligible for most rebates or allowances. (Note : I use the term expat loosely - it tends to conjure up images of someone with housing provided for, flights home every year and occasionally a chauffeur thrown in. We are not that kind of expat.)

We don't get any child care rebates, which take half off the cost of childcare. This is a very important thing as childcare here can cost $100 a day. (Basically, expats under 457 can rule out any Centrelink payments, whatever your income level) It gets worse in New South Wales - temporary residents here have to pay full fares for school - sending your child to a public school can cost $6,000 a year.

We aren't entitled to any Medicare and have to pay for our own insurance, at higher rates than an ordinary resident. Because we aren't entitled to claim the benefits, we then have to apply to get an exemption for the Medicare levy.

Someone was telling me about the education tax refund and I see adverts on TV urging taxpayers to claim all they can claim. The Refund now includes school-approved uniforms, stationery, USB drives, printer cartridges, and practically anything that has to do with the costs of educating children. The amount of the refund increases each year by the Consumer Price Index. Hubs asked, should we keep our receipts?

But you can only claim this tax refund if you are eligible for Family Tax Benefits Part A. And  you can only claim the Family Tax Benefits if you meet residency requirements. So although I did keep some receipts, I can now toss them away.

The Living Away From Home Allowance is a popular payment that can give a tax benefit to expats. It is an allowance that the employer pays to an employee to compensate for additional expenses incurred because the employee is required to live away from their usual place of residence, and the income is paid tax free. But it is conditional upon there being an intention to return after the contract is up. It gets tricky if the employer intends to hire you for the long-term or the job is based on a regular, ongoing employment contract instead of a specific period contract.

Here's what we can claim : Since Hubs works from home sometimes, he can claim for work-related expenses. Now, where are those receipts?

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