Moving from New Zealand to Australia involves navigating a new tax system and understanding financial nuances. As a Kiwi, it’s important to know how your tax obligations will change and how to best manage your finances to avoid unexpected costs. This guide provides essential information to help Kiwis transition smoothly and take advantage of available financial benefits.
Australian Taxation Office (ATO)
The Australian Taxation Office (ATO) is the principal revenue collection agency in Australia. It administers tax laws, ensures compliance, and offers guidance to taxpayers. As a New Zealander, you will be dealing with the ATO instead of New Zealand’s Inland Revenue Department (IRD). Understanding their processes will help ensure you comply with Australian tax laws while avoiding unnecessary penalties.
Tax File Number (TFN)
A Tax File Number (TFN) is a unique identifier issued by the ATO. Without a TFN, Kiwis working in Australia will be taxed at the highest rate. It’s essential for:
- Lodging tax returns
- Applying for government benefits
- Opening bank accounts
- Starting new employment
Applying for a TFN can be done online through the ATO or at a local Australia Post office. Kiwis on a Special Category Visa (SCV) are eligible to apply for a TFN just like Australian residents.
Tax Status of New Zealanders in Australia
New Zealand citizens residing in Australia under a Special Category Visa (SCV) are generally considered Australian residents for tax purposes. This means:
- You’re taxed on your worldwide income, including income from New Zealand.
- You must declare all foreign income in your Australian tax return.
This is a key difference from New Zealand’s tax system, where only domestic income is taxed. However, certain Kiwis may be classified as temporary residents, which can provide tax exemptions on foreign income. If you receive rental income, dividends, or wages from New Zealand, speaking with a tax professional is crucial to avoid overpaying tax.
Goods & Services Tax (GST)
Australia imposes a Goods & Services Tax (GST) of 10% on most goods and services, similar to New Zealand’s 15% GST. However, unlike New Zealand, some essential goods such as fresh food, healthcare, and education are exempt from GST in Australia. Understanding these exemptions can help Kiwis reduce their everyday expenses when moving across the Tasman. If you plan to run a business in Australia, you may need to register for GST and remit collections to the ATO.
Income Tax Returns and Tax Brackets
Australia operates a progressive income tax system, meaning the tax rate increases with higher income levels. It’s important for New Zealanders to understand these rates when negotiating salaries or assessing the cost of living in Australia. Income tax returns are generally due by October 31st each year, but engaging a registered tax agent can provide an extension for filing and ensure you claim all eligible deductions. Here are the current income tax brackets for the 2024/2025 financial year (July 1, 2024 – June 30, 2025):
- $0 – $18,200 AUD: No tax
- $18,201 – $45,000 AUD: 16% of each $1 over $18,200
- $45,001 – $135,000 AUD: 30% of each $1 over $45,000
- $135,001 – $190,000 AUD: 37% of each $1 over $135,000
- Over $190,000 AUD: 45% of each $1 over $190,000
Australian Financial Year
The Australian financial year runs from July 1st to June 30th, which differs from New Zealand’s financial year, which spans from April 1st to March 31st. This difference has significant implications for your tax obligations when moving between the two countries, particularly if you have ongoing income, investments, or assets in New Zealand.
Key Considerations:
- Tax Residency: Determining your tax residency is crucial. You may be considered an Australian tax resident even if you maintain ties to New Zealand.
- Transitional Year: The year you move is a transitional year. You’ll need to file tax returns in both countries, potentially reporting income earned in both jurisdictions.
- Foreign Income: Australia taxes its residents on their worldwide income. If you retain income sources in New Zealand (e.g., rental properties, investments), you’ll need to declare this income on your Australian tax return. Fortunately, Australia has a double tax agreement with New Zealand to prevent you from being taxed twice on the same income.
- ATO Compliance: Understanding the Australian Taxation Office (ATO) reporting requirements is essential for compliance.
- Tax Season: Tax season for individuals in Australia runs from July 1st to October 31st.
Ensuring your financial activities align with the Australian timeframe is critical for accurate budgeting, tax planning, and minimising potential tax liabilities. Consulting with a qualified tax advisor who specialises in cross-border taxation can help you navigate these complexities. Remember that Australian taxes are based on the July 1st to June 30th period; ensure your financial records reflect this for easy and accurate tax preparation. For instance, FY2025 refers to the period between July 1, 2024, and June 30, 2025. Also, be aware of key financial deadlines such as 31 October.
Australia’s Banking System
Australia’s banking sector is dominated by the ‘Big Four’ banks:
These banks provide similar services to those in New Zealand but may have different fee structures and credit assessment processes. Some banks, like ANZ, operate in both countries, making it easier for Kiwis to transfer accounts. Additionally, smaller banks and credit unions provide competitive alternatives for banking services.
Cash vs EFTPOS vs Credit Cards
In Australia, various payment methods are widely accepted:
- Cash: Still accepted but declining in use.
- EFTPOS (Electronic Funds Transfer at Point of Sale): Similar to New Zealand, EFTPOS is widely used for everyday transactions.
- Credit Cards: Accepted nationwide; be mindful of potential surcharges and interest rates.
Digital payments, including mobile wallets, are increasingly popular. However, it’s important to note that the availability of cash services is decreasing, with a significant reduction in bank branches and ATMs in recent years. Kiwis accustomed to New Zealand’s high EFTPOS usage will find the transition to Australia’s payment system relatively seamless.
Takeaway
Moving to Australia as a Kiwi requires adjusting to a new tax system, banking structure, and payment methods. Securing a Tax File Number (TFN), understanding Australian tax residency, and aligning with the financial year are key to staying compliant with the Australian Taxation Office (ATO). Managing income across both countries requires careful tax planning to avoid double taxation.
Additionally, familiarising yourself with Australia’s banking system and the widespread use of EFTPOS, credit cards, and digital payments will make daily transactions smoother. By staying informed, keeping accurate financial records, and seeking professional advice when needed, Kiwis can enjoy a financially stress-free transition to life in Australia.
