Hi, I have a friend from the US visiting and working here temporarily. Generally speaking, I understand we have a tax agreement with the US so there is no double income tax. Would it be the case that he would likely pay tax and then have it reimbursed by the ATO or would the IRS reimburse it? Also would he get super like everyone else but just be able to withdraw it when he leaves the country.
Any general information is appreciated.
Any employment income earned while in Australia will have tax withheld by the employer. At the end of the financial year he will receive a payment summary, and will need to lodge a tax return in Australia to get a refund if there is one owing. (There is a facility to lodge your return early if you meet certain conditions).
I don't know much about the US tax system, but the law in Australia is that you need to include the income earned while overseas and then you get a credit for the tax paid to the overseas jurisdiction. America may be the same, or not…
What visa is your US friend here on?
"no double income tax" doesn't means you can pick one lower tax rated country. It means you will get tax credit for what you paid in one country and pay only the gaps to the other, if it's higher than the other. AFAIK agreement between US and Canada is close to what you mean by tho, heard stories about stay in Canada under <6m and pay much less tax to US.
If he's gonna stay here under <6m he will be likely considered as non-resident for taxation purpose which attract pretty high tax rate due to no tax free bracket. Tho in that case he can play around with tax agreement mentioned above.
If it's >6m, he will be considered as resident for taxation purpose and will get the same rate as locals.
Also he can claim full amount of superannuation contribution through https://applicant.tr.super.ato.gov.au/applicants/default.asp…
Remember he must depart and cancel his VISA first if it's still active, tho single email to DIAC would do the job.
So the TIP is, pour all the earning that falls beyond 0% tax bracket to super and make $$$. ;)
They will probably tax the super when it is withdrawn.
Thanks for the tips - I'm not sure how long the stay is or what Visa at this stage
http://www.ato.gov.au/Individuals/Income-and-deductions/How-…