Tax Return:: Working Holiday Visa: How to Calculate Your Tax Refund/Payable

Hello, this is your tax and super specialist, P&C Tax Professionals.

Over the past few years, we have noticed that there were quite a few people who were curious as to how their tax refund or payable amount was calculated on their tax return. Therefore, in today’s blog post we will provide you with a couple of examples on how your tax refund or payable amount would be calculated as a working holiday maker under different circumstances.

Please refer to our previous blog post “2022FY Individual Income Tax Rates” for the working holiday maker income tax rates that are used in our examples: https://en.pnctax.com.au/single-post/tax-return-2022fy-individual-income-tax-rates

<Example 1: Taxable Income = $0 ~ $45,000>

Kate’s year to date gross income from her employers for the 2022 financial year is $20,000 (tax withheld from this income = $3,000). During the 2022FY, she has also received Jobseeker payments that amounts to $2,500 and an interest income of $200 from her Australian bank account. She has work-related deductions totalling $300. With the information we have, her estimated tax refund amount can be calculated as follows:

Taxable Income = $20,000 (gross income) + $2,500 (govt allowances/payments) + $200 (bank interest income)

Taxable Income = $22,700 - $300 (work-related deductions)

Taxable Income = $22,400

Tax Payable on Taxable Income = $22,400 x 15% = $3,360

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Less Offsets:

Low Income Offset = $700

Low and Middle Income Offset = $675

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Plus Medicare Levy:

Medicare Levy = $0

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Less Credits:

Tax withheld – salary & wage type income = $3,000

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Estimated Tax Refund = $3,360 (Tax Payable on Taxable Income) - $700 (Low Income Offset) - $675 (Low and Middle Income Offset) + $0 (Medicare Levy) – $3,000 (Tax withheld)

Estimated Tax Refund = $1,015

<Example 2: Taxable Income = $45,001 ~ $120,000>

Tom’s year to date gross income from his employers for the 2022 financial year adds up to $55,000 (total tax withheld from this income = $8,250). He also had some bank interest income of $500 from his Australian bank account. During the 2022FY, Tom had enrolled into a cookery course that cost him $1,800 for his tuition fees. With the information given, his estimated tax refund amount can be calculated as follows:

Taxable Income = $55,000 (gross income) + $500 (bank interest income)

Taxable Income = $55,500 – ($1,800 - $250*) -> work-related self-education expenses

* When it comes to self-education expenses, according to the ATO, you cannot claim the first $250 of your work-related education expenses. Therefore, the $250 would have to be deducted from your total work-related self-education expenses when you’re claiming for such an expense.

Taxable Income = $53,950

Tax Payable on Taxable Income = $6,750 + [($53,950 - $45,000) x 32.5%]

Tax Payable on Taxable Income = $9,658.75

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Less Offsets:

Low Income Offset = $325 - [($53,950 - $45,000) x 0.015] = $190.75

Low and Middle Income Offset = $1,500

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Plus Medicare Levy:

Medicare Levy = $0

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Less Credits:

Tax withheld – salary & wage type income = $8,250

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Estimated Tax Refund = $9,658.75 (Tax Payable on Taxable Income) - $190.75 (Low Income Offset) - $1,500 (Low and Middle Income Offset) + $0 (Medicare Levy) – $8,250 (Tax withheld)

Estimated Tax Refund = $282

<Example 3: Taxable Income = $120,001 ~ $180,000>

Lucy’s year to date gross income from her employers for the 2022 financial year adds up to $90,000 (total tax withheld from this income = $13,500). She also earned some income with her ABN totalling $30,500. For the 2022FY, Lucy had work-related expenses that summed up to $450 in total. With the information given, her estimated tax payable amount can be calculated as follows:

Taxable Income = $90,000 (gross income) + $30,500 (ABN income)

Taxable Income = $120,500 – $450 (work-related deductions)

Taxable Income = $120,050

Tax Payable on Taxable Income = $31,125 + [($120,050 - $120,000) x 37%]

Tax Payable on Taxable Income = $31,143.50

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Less Offsets:

Small business income offset = $1,000

Low and Middle Income Offset = $1,500 - [($120,050 - $90,000) x 0.03] = $598.50

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Plus Medicare Levy:

Medicare Levy = $0

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Less Credits:

Tax withheld – salary & wage type income = $13,500

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Estimated Tax Payable = $31,143.50 (Tax Payable on Taxable Income) - $1,000 (Small business income offset) - $598.50 (Low and Middle Income Offset) + $0 (Medicare Levy) – $13,500 (Tax withheld)

Estimated Tax Payable = $16,045

Let’s wrap it up here but if you have any further questions, feel free to send them through our Official Facebook Page (P&C Tax Professionals – Australia) or to our email address at pnctax@naver.com.

Thank you and bye for now!