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Australian Tax Time - foreigners can save 2.5% with Medicare Levy Exemption

From: Benjamin
Sent on: Wednesday, July 18, 2012 1:28 PM


I’ve been getting a lot of questions about whether an accountant is needed to file your Australian tax return. (The tax year here is from July 1st – June 30th). It’s actually 10x easier than in the US and unless you own a business or property it’s incredibly straight forward. Filing takes less than an hour (except for getting the medical levy exemption form).

You just have to download the etax software, which will ask you questions and guide you through the return.
E-tax 2012 download  
Instructions and other tax information  

From your employer you’ll get a PAYG statement (pay as you go statement saying how much you made and how much tax you’ve already paid). This will actually be supplied to the ATO so once you enter your tax file number into e-tax it should automatically know the amounts anyway. The same goes for bank interest. It takes most employers until mid/late July to calculate these numbers and furnish them to the ATO.

If you have a savings account you’ll also have to pay tax on the interest earned. If you supplied your tax file number to the bank, they will report this amount to the ATO (Australian Tax Office) so you don’t have to worry about it. If you didn’t supply your tax file number, the bank will have withheld taxes (at the highest rate) when they paid you your interest. You can report the interest earned and tax paid additionally in e-tax and claim some back at a lower rate. It takes most banks until mid/late July to calculate these numbers and furnish them to the ATO.

Want get 2.5% of your gross income back from overpaid taxes?

Possibly the easiest savings on overpaid taxes is from medical levy exemption. Your employer automatically deducts 1.5% for a medicare levy and an extra surcharge 1% if you make more than ~$70k per year. However, if you were not entitled to medicare benefits (i.e. don’t have citizenship or PR in Australia, UK, or Italy) then you can claim this 1.5- 2.5% back.

If you forgot to do this for previous years, you can still claim it back.

You have to get a certificate from the Medicare Levy Exemption Certification Unit of Medicare Australia showing you were not entitled to Medicare benefits. You qualify for medicare and don’t qualify for the exemption if you have PR in any of the following countries: Australia, UK, Northern Ireland, Italy, Malta, Sweden, the Netherlands, Finland, or Norway.

Once you’ve applied for the certificate (even if you haven’t received it) you can indicate that you weren’t entitled to medicare in etax.

To get the certificate, fill out and scan this form and send it to [address removed]. (takes approximately 4 weeks to process, but you can file your taxes before receiving it back if you’re 100% sure it’ll be approved.)

Scan & email address: [address removed]  

Postal address:
Levy Exemption Certification Unit
Department of Human Services
GPO Box 9822
Hobart TAS 7001

You need
1) The completed form
2) a printed copy of your 457 or working holiday visa details
3) certified copy of the photo page of your passport
4) certified copy of your Australian entry/exit pages in your passport

The most confusing thing about filling in the form is that you have to photocopy all of the pages in your passport showing you entering and departing Australia and then have them certified. You don’t have to have every page of your passport—just the ones where you entered/departed Australia. If you have a lot, you might want to make notes with arrows to help the medicare agent quickly understand your travel history. Then to get these certified, you have to go to find a police officer, pharmacist, justice of the peace, etc. and show them the original pages and the copies. Also certify the picture ID page of your passport. This should all be free.

Then I'd also had write on the photo copies descriptions of the stamps with arrows to them saying things like[masked] arrived in Australia from Japan or whatever. The first time I applied it took forever because they couldn't easily interpret what was happening in my passport.

Then also spell it out for them to make it easy with a cover letter like
this: (healthcare isn't necessary, but I did it anyway)


Please find attached application form for Medicare Levy Exemption Certification as well as certified copies of all my passport pages showing my movements in and out of Australia during the tax year
[masked] -[masked].

Also note that I held a 457 visa for the entire tax year (visa grant number[masked]###### attached) and I've had private health care for the entire year (Aushealth member number 1202####) <NOTE THIS IS REQUIRED BY LAW BUT NOT NECESSARY TO PROVE FOR THE EXEMPTION>. I am only a citizen of the United States and hold no permanent residence for any other countries.

I left Australia once during the[masked] Financial Year to the United States
16 December 2011 - Departed Sydney for United States
03 January 2012 - Arrived in Sydney from the United States

Prior to that trip I began the financial year in Australia from a previous entry on 30 June 2011 from the USA and after the trip I remained in Australia for the rest of the financial year.

Best Regards,

First Last Name

1 George St
Surry Hills NSW 2010
[address removed]

Note that I am not a professional licensed to give tax advice so it is up to you to ensure your taxes are filed properly. Although I’ve been filing my own taxes here for several years and thought I would share my knowledge.

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