International Student Tax Return Explained: Claim Your Refund

If you're an international student in Australia, this is your go-to guide for understanding taxes.

From navigating the filing process to enjoying benefits like tax offsets and lower rates, we've got you covered.

The Australian financial year runs from July 1 to June 30, and here's all you need to know about international student tax returns, visa tax rates, claiming uni fees, getting a tax refund, and meeting the submission deadline.

1. Are You an Australian Tax Resident?

If you are an international student living in Australia for more than six months, you will be considered an Australian resident for tax purposes. 

According to the ATO (Australian Taxation Office), by residing in Australia for over six months, your routines and behaviour become consistent with a person living in the country for tax purposes.

If you are unsure whether you are a tax resident or not, you can get in touch with a registered tax agent or visit the ATO’s website for more clarification.

2. What Happens If You Are a Tax Resident in Australia?

Assuming that you are a tax resident in Australia, you will have to consider some critical tax implications. If your taxable income is $18,200 or below, you will be entitled to a tax-free threshold, and you won’t have to pay any income tax for the year ending on June 30. 

Additionally, you can also apply for a refund. For instance, you had a part-time job and received a salary from which your employer deducted the income tax. 

If the total taxable income from your part-time job was $18,200 or less, you could apply for a refund for the deducted amount from your salary. 

No matter where you earn your income, you will be liable to pay tax in Australia on all your assessable income for the year ending on June 30. 

Also, if inadequate income tax has been deducted from your salary, or you have received other assessable income for which you owe tax. In that case, you will be legally required to file a return and pay tax.

3. How To Lodge an International Student Tax Return In Australia?

If you live in Australia for tax purposes, there are a few important things to know. If your yearly income is $18,200 or less (until June 30), you don't have to pay income tax – that's called a tax-free threshold.

If you had a part-time job and your employer took out income tax, and your total income is $18,200 or less, you can ask for a refund of the deducted tax.

No matter where your money comes from, you need to pay your taxes in Australia. If your employer didn't take out enough tax from your paycheck or you have other taxable income and owe tax, you must file a return and pay what you owe – it's the law.

To lodge a tax return, visit the official Australian Taxation Office website at www.ato.gov.au.

4. What Are The Requirements For Lodging an International Student Tax Return?

Every individual, including international students, filing an income tax return requires a Tax File Number (TFN). Any income received, including bank account interest, may be subject to the highest tax rate without a TFN.

To obtain a TFN online, visit the ATO website. If applying offline, complete the application forms from the Australian Taxation Office and submit them at any tax office.

Additionally, gather the following information:

• Bank Statements: Displaying the interest you have received.

• Payment Summary: Issued by the employer at the end of each financial year, indicating tax withheld and total income earned.

• Dividend Slips: Showing payments made by the organisations where you hold shares.

• Photo ID: Such as your passport.

• Other invoices, receipts, and work-related expenses.

Often, international students working in low-income or part-time jobs pay more tax than necessary. Filing international student tax returns in Australia ensures eligibility for a tax refund.

Note: If you are expecting a tax refund, you need to have your bank account information ready so that your tax refund gets deposited immediately.

5. What Types of Income Are Included in Your Return?

As you file your tax return, you must show all the taxable income you received in the financial year. You can generate income from several sources, which may include the following:

• Wages and salaries as a part-time, full-time or casual employee. 

• Income from bank interest. 

• Bonuses and allowances.

• Government allowances include Austudy payments, Youth Allowance, Newstart Allowance, and more.

• Gratuities and tips earned while working. 

• Dividend income.

• Income received as an independent contractor. 

• Capital gains through the sale of assets. 

• Business income, which does not include fees received from a hobby.

• Distributions received as a partner in a partnership.

Bear in mind that any work-related expenses and personal deductions can reduce the total amount of assessable income.

6. What Form of Deductions Can You Claim?

You have the opportunity to lower your overall taxable income by claiming deductions.

These deductions apply to specific expenses directly associated with generating your income.

Deductions fall into three categories: self-education expenses, work-related deductions, and personal deductions. Explore some common deduction forms that you can claim:

• Work-related phone and internet expenses. 

• Costs for compulsory work uniforms or protective clothing.

• Vehicle and travel expenses between work sites. This does not include the fees of travel between work and home. 

• Home office running costs. It includes printers, computers, furniture, heating, cooling, lighting, and more.

• Work-related subscription and union fees.

You may also be able to claim work-related deductions for the cost of briefcases, tools of the trade, and calculators that cost less than $300. Remember, you can only claim these expenses if you have kept the relevant receipts, invoices, and bank statements.

7. Is it Better to Do Your Tax or Use a Tax Agent?

International students can easily do their taxes in Australia themselves by using ATO’s myTax product. However, if you need additional expertise, you can take help from a registered tax agent who usually charges a fee to lodge returns. 

Some agents even deduct the amount they charge directly from your claimed tax returns. This way, you do not need to physically hand them over the money. Here are a few benefits of hiring a tax agent:

• They make sure to include all the deductions that you are eligible for.

• A tax agent or an accountant will also ensure the accuracy of your returns.

• You can claim the cost of hiring a tax agent and the tax returns for the next fiscal year.

8. When Can You Claim Self-education Costs?

If you're working and taking a course in Australia to boost your skills, you can get some money back for your study costs. This works if the course is related to your job.

You can also claim the costs of your textbooks, travel costs, stationery, course fees and items like tablets, laptops, and printers.

Note: Check out Taxation Ruling by the ATO to see clear examples of when you can and cannot claim self-education costs.

9. How To Claim Tax Returns If You Are Leaving Australia?

If you're an international student planning to leave the country before the end of the financial year, you can submit your tax returns ahead of time. In this case, you'll need to use a paper return, which may take some time.

Alternatively, you can complete the process online from your home country after June 30 if you're short on time for a paper return.

10. How Long Does It Take to Get Your Refund?

If you do your taxes online, you'll get your refund in about two weeks. If you choose mail, it could take around six weeks to get your refund.

11. Where To Find More Help?

For assistance with Australian taxes, the ATO website is the go-to resource, providing answers to all your questions. Additionally, your university's financial or student services may offer guidance on managing taxes in Australia.

12. Frequently Asked Questions (FAQs)

How Much Tax Do International Students Pay in Australia?

The amount of tax payable depends on whether you are considered a "Resident" or "Non-Resident" in Australia for tax purposes.

Resident Tax Rates 2023-24

Non-Residents/Foreign Residents Tax Rates 2023-24

Working Holiday Maker Tax Rates 2023-24

Do international Students Need to Pay The Medicare Levy?

No. International students are not entitled to Medicare benefits in Australia, so they are not liable to pay the Medicare levy.

However, they need to apply for a Medicare Entitlement Statement from the Services Australia website to get an exemption from paying the Medicare levy.

Do international Students Need a TFN in Australia?

Yes. As an international student, you need a Tax File Number (TFN) to lodge a tax return in Australia. The Australian Government will withhold 46.5% of your earnings without a tax file number.

Additionally, you will miss out on other benefits of the Australian tax system, such as the tax offsets and tax-free threshold.

Can International Students Claim Tax Back?

International students who earn an income below the tax-free threshold of $18,200 can receive a refund of all the taxes they paid.

If their earnings exceed the threshold, they can claim a portion of the taxes, with the remaining amount being retained by the government based on their income.
 

Do International Students Need a ABN?

Yes. International students must obtain an Australian Business Number (ABN) if they engage in work as contractors in Australia.

What Can International Students Claim on Tax in Australia?

You can claim various work-related expenditures as a deduction in your tax return. Some of the examples include:

• Home office expenditure

• Work-related internet and phone expense

• Travel expenses between job sites

• Laundry and uniform expenditure

• Tax accountant charges

It's crucial to have receipts and invoices for the expenses you want to claim on your tax return. Failing to provide the necessary documents during the tax return filing could result in penalties from the ATO.

Useful Links to Explore:  

• English Language Requirements for Australia
• Cultural differences you may experience in Australia
• How to find Part-Time work as a Student in Australia
• Seven Tips for Students on a Budget in Australia
• How to get a Scholarship to Study in Australia
• Driving in Australia as an International Student
• How to change your Course or Institute in Australia
• The Benefits of a Professional Year Program (PYP)
• A Complete Guide to Study in Australia
• Types of Education in Australia 
• What to Study in Australia?