Tax Guide for International Students Studying in Australia
Studying in Australia is an amazing experience, and understanding your tax obligations is an important part of your journey. This guide explains everything you need to know as an international student, from getting a Tax File Number to claiming your tax back when you leave.
Your Tax Residency Status: The Key Factor
The most important thing to determine first is your tax residency status, as it affects your tax rates and obligations.
- Most international students are considered Australian Residents for Tax Purposes. This is not based on your citizenship or visa type, but on whether you reside in Australia. If you have lived here for over six months, primarily for study, you will likely be a resident for tax purposes.
- Why it matters: As an Australian tax resident, you are entitled to the tax-free threshold. This means the first $18,200 you earn in the financial year (1 July – 30 June) is tax-free.
Step 1: Get a Tax File Number (TFN)
Before you start any work, you must apply for a Tax File Number (TFN). It is free.
- How to Apply: As an international student, you must use the specific online application for foreign passport holders on the Australian Taxation Office (ATO) website.
- What You Need: Your valid passport and a Australian visa.
- Why You Need It: Give your TFN to your employer. Without it, they will withhold tax from your pay at the highest rate (47%), which is much higher than normal.
Step 2: Understand Your Tax Rates
As an Australian resident for tax purposes, you are taxed at the same progressive rates as local students and citizens.
Resident Tax Rates for 2024-25:
- 0% on the first $18,200
- 19% on income from $18,201–$45,000
- 32.5% on income from $45,001–$120,000
- (Higher rates apply for incomes above $120,000)
Your employer will use these rates to calculate how much tax to withhold from your paycheck.
Step 3: Working & The $45,000 Threshold
A special rule applies to many international students who are also working holiday makers. However, most international students on a subclass 500 student visa are exempt from this.
- Standard Rule: Most international students are taxed as residents (see rates above) from their first dollar of income.
- The Exception: If you are both an international student and on a working holiday visa (subclass 417 or 462), you will be taxed at the higher working holiday maker tax rate of 15% on income up to $45,000, even if you are a tax resident. This is a specific law that overrides the usual resident rules.
Step 4: Lodging Your Australian Tax Return
After the end of the financial year (30 June), you must lodge a tax return if you earned any income.
How to Lodge:
- Create a myGov account and link it to the Australian Taxation Office (ATO).
- Your income information from your employer will be pre-filled in your account (usually by mid-July).
- Complete the online tax return. The system will guide you and apply the tax-free threshold.
What You Can Claim (Deductions):
You can claim money you spent for work purposes. Keep your receipts!
- Work-related travel (e.g., between two different jobs, but not from home to work).
- Uniforms or protective clothing (e.g., a branded shirt or safety boots).
- Self-education expenses if your course relates directly to your current job (e.g., a barista course if you work in a cafe).
- Home office expenses if you worked from home.
Getting Your Tax Refund
If the total tax your employer withheld during the year is more than your final tax bill, you will receive a refund. This is very common for students who work part-time.
- When: After you lodge your tax return online, most refunds are issued within 2 weeks.
- How: It will be deposited directly into your Australian bank account.
What to Do When You Leave Australia
When your studies are finished and you leave Australia permanently, you have two key tasks:
1. Lodge a Final Tax Return
Lodge your tax return for the part of the financial year you were working in Australia.
2. Claim Your Superannuation (DASP)
If you worked, your employer paid superannuation (super) into a fund for you. You can claim this back through the Departing Australia Superannuation Payment (DASP) scheme.
- Important: You must have left the country and your visa must have expired to claim your super.
- Tax on Super: DASP payments are taxed at a high rate (65%) for working holiday makers, but for most international students on a subclass 500 visa, the tax rate is 35%.
Key Responsibilities & Tips
- Always Declare All Income: This includes cash-in-hand work. The ATO has sophisticated data-matching systems.
- Keep Your Receipts: For any work-related expenses you want to claim, you must keep receipts for at least 5 years.
- Update Your Address: Inform the ATO when you change your address, both within Australia and when you leave.
- Beware of Scams: The ATO will never contact you via email, SMS, or social media demanding immediate payment or threatening arrest. These are scams.
FAQs for International Students
Q: Is the money I receive from my family overseas taxable?
A: No. Gifts or money sent from your family for your living expenses are not considered income and are not taxable.
Q: Do I need to pay tax on my scholarship?
A: It depends on the scholarship. Some are tax-free, and others are taxable. You should check the terms of your scholarship and seek advice from your education provider or a tax agent.
Q: I am from a country with a Double Tax Agreement (DTA) with Australia. Do I pay tax?
A: Yes. While a DTA can determine which country has the right to tax certain types of income, if you are a resident of Australia for tax purposes, your Australian-sourced employment income is taxable in Australia.
Q: Can I use a tax agent?
A: Yes. Using a registered tax agent can be helpful, especially if your situation is complex. They can also help you lodge your DASP claim. Ensure they are registered with the Tax Practitioners Board.
Q: What if I forget to lodge a tax return?
A: You should lodge it as soon as you remember. The ATO may issue you with a notice requiring you to lodge. It is better to be proactive to avoid any issues.