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

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

In line with our previous blog, today we will take a look at how the tax refund or payable amount is calculated for those of you who have held a working holiday visa for part of the financial year before being granted another visa in the same financial year. As expected, the process is a little more complicated than someone who was a working holiday maker (WHM) for the full duration of the financial year.

To get the full list of the individual income tax rates for residents and working holiday makers, please refer to our previous blog post titled “2022FY Individual Income Tax Rates”: https://en.pnctax.com.au/single-post/tax-return-2022fy-individual-income-tax-rates

For the updated new Low and Middle Income Tax Offset rates which will apply to your 2021-2022FY tax return, please make reference to our previous blog post on LMITO rates: https://en.pnctax.com.au/single-post/tax-return-updated-2021-2022fy-low-and-middle-income-tax-offset-lmito

<Example 1: Working Holiday Visa + Student Visa / Taxable Income = $0 ~ $45,000>

Henry’s year to date gross income from his employer for the 2022 financial year is $42,000 (from which $22,000 = working holiday maker / $20,000 = student visa holder). Tax withheld from this income is $3,300 as a working holiday maker / $1,740 as a student visa holder. He has work-related deductions which adds up to $400. With the information we have, his estimated tax payable amount can be calculated as follows:

Taxable Income (WHM) = $22,000 (gross income) - $400 (work-related deductions) = $21,600

Taxable Income (Student visa holder) = $20,000 (gross income)

Tax Payable on Taxable Income (WHM) = $21,600 x 15% = $3,240

Tax Payable on Taxable Income (Student visa holder) = $20,000 x 19% = $3,800

Tax Payable on Taxable Income = $3,240 + $3,800= $7,040

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Less Offsets:

Low Income Offset = $700 – [($41,600 - $37,500) x 0.05] = $495

Low and Middle Income Offset = $675 + [($41,600 - $37,000) x 0.075] = $1,020

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Plus Medicare Levy:

Medicare Levy = $0

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Less Credits:

Tax withheld – salary & wage type income = $5,040

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Estimated Tax Payable = $7,040 (Tax Payable on Taxable Income) - $495 (Low Income Offset) - $1,020 (Low and Middle Income Offset) + $0 (Medicare Levy) – $5,040 (Tax withheld)

Estimated Tax Payable = $485

<Example 2: Working Holiday Visa + Student Visa / Taxable Income = $45,001 ~ $120,000>

Lauren’s year to date gross income from her employer for the 2022 financial year is $65,000 (from which $15,000 = working holiday maker / $50,000 = student visa holder). Tax withheld from this income is $2,250 as a working holiday maker / $5,550 as a student visa holder. She has work-related deductions which adds up to $700. With the information we have, her estimated tax payable amount can be calculated as follows:

Taxable Income (WHM) = $15,000 (gross income)

Taxable Income (Student visa holder) = $50,000 (gross income) - $700 (work-related deductions) = $49,300

Tax Payable on Taxable Income (WHM) = $15,000 x 15% = $2,250

Tax Payable on Taxable Income (Student visa holder) = $5,092 + [($65,000 - $700) - $45,000] x 32.5% = $6,272.50

Tax Payable on Taxable Income (Student visa holder) = $5,092 + $6,272.50 = $11,364.50

Tax Payable on Taxable Income = $2,250 + $11,364.50 = $13,614.50

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Less Offsets:

Low Income Offset = $325 – [($64,300 - $45,000) x 0.015] = $35.50

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 = $7,800

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Estimated Tax Payable = $13,614.50 (Tax Payable on Taxable Income) - $35.50 (Low Income Offset) - $1,500 (Low and Middle Income Offset) + $0 (Medicare Levy) – $7,800 (Tax withheld)

Estimated Tax Payable = $4,279

<Example 3: Working Holiday Visa + 482 Visa / Taxable Income = $0 ~ $45,000>

Cameron’s year to date gross income from her employer for the 2022 financial year is $17,500 (from which $2,700 = working holiday maker / $14,800 = student visa holder). Tax withheld from this income is $405 as a working holiday maker / $1,695 as a student visa holder. She has work-related deductions which adds up to $370. With the information we have, her estimated tax refund amount can be calculated as follows:

Taxable Income (WHM) = $2,700 (gross income) - $370 (work-related deductions) = $2,330

Taxable Income (Student visa holder) = $14,800 (gross income)

Tax Payable on Taxable Income (WHM) = $2,330 x 15% = $349.50

Tax Payable on Taxable Income (Student visa holder) = $0 (since her taxable income is under the tax-free threshold of $18,200)

Tax Payable on Taxable Income (Student visa holder) = $349.50

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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 = $2,100

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Estimated Tax Refund = $349.50 (Tax Payable on Taxable Income) - $700 (Low Income Offset) - $675 (Low and Middle Income Offset) = $0

* The tax offsets will reduce the tax payable on taxable income to $0 but it cannot help you to increase your tax refund amount. Therefore, even if Cameron has tax offsets that adds up to $1,375, once her tax payable on taxable income reduces to $0, she can no longer use the offsets to increase her tax refund.

Estimated Tax Refund = $0 (Tax Payable on Taxable Income) + $0 (Medicare Levy) – $2,100 (Tax withheld)

Estimated Tax Refund = $2,100

Let’s end it here but if you have any other questions related to your tax return or super, please reach out to us through our official Facebook Page (P&C Tax Professionals – Australia) or send them to our email address at pnctax@naver.com.

Thank you and bye for now!