One benefit for backpackers on working holidays in Australia is that in many instances they are entitled to a tax refund for certain expenses they have incurred in the course of their employment. The following guide will help backpackers on a working holiday in Australia determine whether they will be entitled to a tax refund at the end of the financial year.

The main criterion to identify whether a backpacker will be entitled to a tax refund is they must have been in Australia for a minimum of 6 months in any one financial year. They must also have worked for one employer for a continuous period of 4 months or more than one employer for a continuous period of 5 months. Obviously thee backpacker on a working holiday in Australia must also have paid tax to be eligible for a tax refund. If these basic criteria are met then for the purpose of Australian tax laws, the backpacker will be considered a resident for tax purposes and may be eligible for a tax refund.

When can Backpackers claim a Tax Refund?

The Australian financial year runs from 01 July until 30 June each year. If a backpacker on a working holiday in Australia is in Australia until the end of a financial year then they can submit a tax return anytime after 30 June. If however a backpacker on a working holiday in Australia leaves Australia permanently before the end of the financial year they are entitled to submit their tax return at the time they leave. Backpackers who submit their tax return during a financial year as opposed to the end of a financial year can expect some delays in receiving any tax refund they may be entitled to.

How come Backpackers get a Tax Refund?

Taxation law is complex and taxation policies are put in place with the understanding that employees will be employed long term. When backpackers come to Australia on a working holiday and are employed for a period of 6 months or longer, they are considered to be an Australian resident for taxation purposes. As these backpackers on working holidays are considered to be Australian residents for tax purposes they become eligible for the tax free threshold.

The tax free threshold means that’s an employee does not need to pay tax on the first $18,200.00 of their employment income. Backpackers on working holidays in Australia claim certain deductions for employment related expenses on the tax they have paid.  So for example, if a backpacker on a working holiday in Australia earns less than $18,200.00 in the financial year, then they will be entitled to claim all of the tax they have paid back from the Australian Tax Office.

How much can a Backpacker expect to receive in their Tax Refund?

There are many variables in working out how much a backpacker on a working holiday in Australia will receive for their tax refund. It is dependent upon how much the backpacker has earned as well as what tax deductions they are entitled to. There is no one answer for how much a backpacker on a working holiday can expect to receive in their tax refund. It is however, important that backpackers on working holidays in Australia obtain specialized tax advice from a tax agent to ensure they can maximize their tax refund.

What can a Backpacker claim as Tax Deductions?

There are many expenses that a backpacker on a working holiday can claim as a tax deduction so long as the expenses were a necessary expense for their employment. The most common expenses for backpackers on working holidays in Australia are safety equipment (such as steel toed work boots and sunscreen), maintaining industry specific certifications (such as Responsible Service of Alcohol certification) and laundering (such as keeping compulsory uniforms in a clean and presentable state).

Backpackers on a working holiday in Australia should seek the advice of a tax agent that specializes in backpacker tax refunds to ensure that they claim all of their eligible entitlements.

How does a Backpacker claim their Tax Refund?

While backpackers can do their own tax return online through the Australian Tax Office, it is highly recommended that they seek the assistance of a tax agent that specializes in backpacker tax returns. By using a tax agent that specializes in backpacker tax returns, the backpacker can be assured that they will maximize their tax return.

What do Backpackers need to obtain their Tax Refund?

At the end of the financial year, the employer or employers that have employed the backpacker on a working holiday in Australia will provide the backer with a Pay As You Go (PAYG) summary. The Pay As You Go summary identifies the earnings and also tax paid by the backpacker during the relevant financial year. The tax agent that the backpacker uses to claim their tax refund will need the Pay As You Go summary to fill out the tax return and also work out how much the backpackers tax refund will be.
Backpackers will also need to keep all of their receipts for employment related expenses to justify any deductions from their taxable income. These receipts will also assist their tax agent in preparing their tax refund.

How long does it take for a backpacker to receive their Tax Return?

Backpackers on working holidays in Australia who submit their tax return at the end of the financial year can generally expect to receive their tax refund within 4 weeks. However, the actual time taken will be dependent on the workload of staff at the Australian Tax Office. The week following the end of financial year is often a busy time for the Australian Tax Office and processing times can be delayed.

Backpackers who submit their tax return mid way through the year after returning home from their working holiday in Australia can also expect some processing delays. A tax agent who specializes in backpacker tax will be able to provide individual backpackers with a more reliable timeframe for processing when they submit the tax return.

That really depends but provided you have all your documents, if you claiming part way through a tax year and how fast your tax agent can finalise your return. Generally, if you have all the documents (PAYG) and are not claiming in the middle of a tax year then normally around 3-4 weeks.

Are Backpackers able to claim their Tax Refund after they have left Australia?

Backpackers who have already left Australia are able to still submit their tax return after they return to their home country. Specialist tax agents in Australia who focus solely on backpacker tax returns are also able to assist backpackers when they return to their home countries. These tax agents provide a convenient and effective way for backpackers to submit their tax return from the comfort of their very own home.

How do Backpackers receive their Tax Refund?

If backpackers who have been on a working holiday in Australia still have an open Australian bank account can have their tax refund deposited directly into this account. If the backpacker has closed their Australian bank account then the tax agent that they use will be able to have the tax refund deposited directly into their overseas bank account.

Backpackers who are receiving their tax refund into an overseas bank account need to be mindful of fees they may incur such as currency conversion and transfer fees. The tax agent that the backpacker uses will be able to provide the backpacker with detailed information on expected fees.

Conclusion

Taxation is a complex matter and backpackers on working holidays in Australia should always seek the advice and assistance of a tax agent that specializes in tax refunds for backpackers. By seeking the advice and assistance of these tax agents then backpackers can be assured that they will receive the maximum tax refund possible.

Tax agents are also able to offer advice to backpackers in Australia on working holidays with detailed advice about how they can legally minimize the amount of tax that they are required to pay. This advice should be obtained by the backpacker on a working holiday in Australia prior to arriving in Australia or soon after arriving.

Tax refunds provide backpackers in Australia with an opportunity to access additional funds either when they return home from their working holiday or at the end of the financial year. It is important for backpackers to remember to retain all of their receipts for employment related deductions not only to act as a prompt for their tax agent but also to prove the expenses should the Australian Tax Office request additional information.
While paying tax may seem like a financial hindrance to backpackers on working holidays in Australia, it does offer the benefit of providing the backpacker with a forced savings plan. However, to maximize the amount that the backpacker receives in their tax refund they need to be mindful of the acceptable deductions they can claim and keep clear records so that these allowable deductions are not overlooked when it comes time to submit their tax return.
The importance of using a tax agent who specializes in backpacker tax returns cannot be over emphasized. There are so many do’s and do not’s involved with Australia’s tax system that backpackers could ever expect to know all they need to know. Tax agents who specialize in preparing tax returns for backpackers in Australia have the benefit of both education and experience to assist backpackers to gain a large tax refund.

So long as a backpacker follows specialized advice, maintains complete records of all their income and expenses and uses a tax agent who specializes in backpacker tax returns then they will receive the maximum tax return they can. Undoubtedly the larger the tax refund the better it is for the backpacker who has been on a working holiday in Australia.