Money in Australia: Wages, Taxes and More for Work and Holiday Visa

Money and Wages in Australia

Australian Currency

First things first, you’ll need to know what money looks like in Australia. Here’s a break down of Australian coins and bank notes (known as bill in the U.S.). There are silver-colored coins for 5 cents, 10 cents, 20 cents and 50 cents; gold-colored coins for $1 and $2; and bank notes for $5, $10, $20, $50 and $100.

The notes, which are made from plastic, are very durable. Each note denomination is a different size and color. The size of the note increases as the value increases. The $5 note is pink, the $10 note is blue, the $20 note is red, the $50 note is yellow, and the $100 note is green.

You likely have noticed that there is no coin for 1 cent. This is because prices are rounded to the nearest 5 cents for purchases. Your bank account will reflect an amount to a 1 cent detail, but this is also effectively rounded to the nearest 5 cents for actual value.

The currency exchange rate is really beneficial for U.S. citizens when converting U.S. dollars to Aussie dollars. 1 Australian dollar is equal to 75 U.S. cents (as of the post publication date). For the most recent exchange rate, simply google AUD to USD.

Wages

The national minimum wage in Australia is $17.70 per hour or $672.70 per 38-hour week before tax. This is significantly higher than the minimum wage in the U.S., but a portion of your wages will go to taxes and superannuation. Plus the cost of living in Australia is fairly high.

Thankfully, most jobs offer pay higher than the minimum wage. The average wages for jobs most often held by people on the Work and Holiday visa is about $20-$25 per hour. In many hospitality, retail and food industry positions, you’ll also get a higher hourly rate, known as penalty rates, for working on public holidays, Sundays and late nights.

Some positions may have pay listed as salary or annual pay. Ask the employer to break the pay amount down into an hourly wage. You don’t want to be overwhelmed by a large number only to make a measly hourly rate. Always clarify what your wages will be before accepting a job.

I recommend holding out for a job that offers you pay above the minimum wage. And I would avoid working on commission, because you’ll likely receive diminutive pay. Of course, you can always work a lower paying job to have an inflow of cash while looking for a better gig.

Getting Paid in Cash

Be wary of jobs that pay cash-in-hand. Employers are often avoiding taxation by paying you under the table, which is illegal. Since taxes won’t be withheld from your wages, you’ll owe a considerable amount when you file a tax return. In addition, you won’t get penalty rates, superannuation or workplace rights like workers’ comp or sick leave.

Not all cash paid jobs are illegal, but legitimate ones are few and far between. If you are paid in cash, make sure your employer withholds taxes from your wages and contributes to your superannuation if you meet the requirements (more details below). Also ensure that you will be paid penalty rates, and know your workplace rights.

Be sure you open a bank account to store your wages. I highly recommend opening a savings account as well to earn some interest on your money.

Taxes

For Work and Holiday visa workers, there is a flat rate of 15% for the first $37,000 of income. For income above $37,000, a set dollar amount plus an additional percentage will be taken out based on the total income.

Australia works on a pay as you go system, meaning that taxes will be withheld from each paycheck. You should not be required to pay the Medicare levy. You’ll also be exempt from paying the temporary budget repair levy if you make under $180,000.

For the most recent individual tax rates and information, visit the Australian Taxation Office website. Income taxes and corresponding tax returns are done at the federal level in Australia, with no income tax imposed by the state.

Tax File Number

Before you start working, you should apply for a tax file number (TFN). Your TFN is a personal reference number for the Australian tax system. It links your pay and taxation information to track how much tax you have paid. You are not required to have a TFN, but you pay less tax if you have one.

You will give a TFN declaration to your employer, so they can calculate how much tax to withhold from your pay. Be sure to note that you are a working holiday maker or you may be taxed at the foreign resident rate of 32.5% or more. However, if your employer is not registered with the Australian Taxation Office, tax will be withheld at the foreign resident rate.

Once you are in Australia, you can apply for your TFN online. The application is very simple, but it can take up to 28 days to process. The taxation office will mail your TFN, so be sure to use an address where you will be located for several weeks in Australia.

Tax Returns

You’ll also use your TFN to file your tax return, which is required each fiscal year. The Australian income year starts on July 1 and ends on June 30 of the following year. You have from June 30 until the end of October to lodge your return. If you leave Australia permanently before the end of the tax year, you can file your return early.

Once you finish work, your employer will give you a payment summary showing how much you earned and the tax withheld. You will enter the information from each payment summary you received for the tax year on your return.

The amount of taxes you owe will be calculated on your income for the year. If the withheld amount is greater than the taxes owed, you will get a refund of the difference. If enough was not withheld from your wages, you will have to pay the disparity.

I recommend filing online with myTax through the Australian Taxation Office. Include any deductions possible to help boost your chance of getting a return.

In previous years, if you lived and worked in one job in Australia for at least six months of the fiscal year, you could file as a resident and pay significantly less tax. However, things have changed since January 1, 2017. Essentially anyone on a working holiday visa will not be able to file as a resident and will be taxed at the rates described above. There are some exceptions, but only if you truly plan to make Australia your home.

Superannuation

Superannuation, known as super, is Australia’s retirement savings system. Your TFN will also be connected to your super fund, which will make it easier to keep track of your super. Not all jobs will pay super, but if you get it, it’s grand.

You are generally entitled to super if you make $450 before tax per month. Some employers will list wages as the dollar amount per hour plus super (e.g. $20/hour + super) in the job description. But the best way to know for sure if you’ll get super contributions is to ask your employer during the interview process.

With super, your employer will contribute at least 9.5% of your pre-tax wages from your ordinary hours. These contributions are on top of your wages, not deducted from your paycheck. They must be paid at least every three months.

Super Funds

The superannuation is placed in a super fund. You may be able to choose your own super fund, but if you do not, your employer will assign one for you. There are five main types of super funds: industry, retail, public sector, corporate and self-managed.

The super fund is an investment scheme. Your super contributions will be invested based on your fund. The returns and risks vary for each type of fund. Note that your super fund will more than likely charge fees for managing the account.

Getting Your Super Back

Once you leave Australia, you can file to get your super back. You’ll need to lodge an application for a Departing Australia Superannuation Payment (DASP), which will be taxed at 65%. You can only file a DASP once you have left Australia and your visa has expired or been cancelled.

However, it’s a good idea to start the application before you leave so you get all of the documents required for applying. Some need to be certified, and it’s much easier to do so while still in the country. Once you leave, you can file the application. The DASP is usually processed within 28 days.

Disclaimer: this information is provided as a guide. This website is for informational purposes only, and is not intended to provide or be relied on for tax, legal or accounting advice.

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