No 15

I'm not employed here in Australia but I notice that my bank account is debited by a few dollars every now and again and there's a TFN (tax file number) reference next to it.

I know it's a small amount however should I be paying tax on my savings account if I'm not employed?

Thank you

ozhappy981

If the Australian bank takes tax off your interest, then that is because you did not give them your tax file number (called TFN withholding). Give them your tax file number - and they will stop taking tax off you. Just phone them.

As for whether you need to pay tax on your bank interest, that's another question. If your worldwide income (assuming you are PR) is under $6,000, then you do not need to pay tax on it. To get back any tax that you have paid (e.g. the bank took it) complete a tax return at the end of the tax year - and you will get it all back.

No 15

Thanks. What is the tax year here?

ozhappy981

1 July to 30 June. In other words, you can do your 2010 tax return any time from 1 July 2010.

MartinLuther

Just to add that you can actually earn up to about $14k* before you start paying tax because of something called LITO.

* I'm sure ozhappy can give the exact number.

ozhappy981

Yep. Assuming you are a PR resident and have been in the country for the whole of the 2010 tax year, you can have a taxable income of $15,000 before you pay any tax.

Ramzi

Hi,

is this LITO aailable only for PR holders?

ozhappy981

No, it is available to all who are tax-resident .

In other words, if you are here on a 457 visa, you will get LITO (457 holders generally get taxed at resident rates - temporary resident).

If you are a backpacker, here on a WHV, travelling around the country and working a bit here and there, you will be non-resident, which also means no LITO.