LENGTH MATTERS
Your tax rate will depend on whether the Government determines if you are an Australian Resident for Tax Purposes or a Non-Australian Resident for Tax Purposes. Residents have significant tax advantages over non-residents and can save several thousand dollars per year.
If you have an Australian Student Visa, the duration of your visa will become a key tool used to determine if you’re an Australian Resident for Tax Purposes or a Non-Australian Resident for Tax Purposes.
The ATO uses what’s called a “residency test” to determine how to classify you. Depending on how the ATO categorises you, you’ll be taxed in two different ways:
- Australian Resident for Tax Purposes: you will be considered an Australian Resident if:
- You hold a Student Visa that lasts for more than six months, and you stay in Australia for more than six months; OR
- Your course is shorter than six months, but you spend more than 183 days in Australia (with a visa or visas that allows you to work) during the financial year (1st July – 30th June)
- Non-Australian Resident for Tax Purposes: you will be a Non-Australian Resident for Tax Purposes if:
- You are on a Student Visa and your course is shorter than six months; OR
- You don’t spend more than 183 days in Australia with a visa that allows you to work
If you are on a Work and Holiday or Working Holiday Visa, you will be taxed as a Working Holiday Maker.
TAX IMPLICATIONS FOR EACH CLASSIFICATION:
If you are an Australian Resident for Tax Purposes you won’t pay tax ($0) on the first $18,200 you earn as salary, wages and subcontractor’s income. After this, your tax will start at 16% but will increase as your income rises (if you don’t exceed the minimum amount and you had some tax withheld, you will be able to claim it back on your tax return).
The table below from the Australian Tax office shows tax rates for 2025-2026
| Taxable income | Tax on this income |
|---|---|
| 0 – $18,200 | Nil |
| $18,201 – $45,000 | 16c for each $1 over $18,200 |
| $45,001 – $135,000 | $4,288 plus 30c for each $1 over $45,000 |
| $135,001 – $190,000 | $31,288 plus 37c for each $1 over $135,000 |
| $190,001 and over | $51,638 plus 45c for each $1 over $190,000 |
The above rates do not include the Medicare levy of 2%.
If you are a Non-Australian Resident for Tax Purposes, you will have to pay 30% from the first dollar earned in Australia. For instance, if your income within the financial year was $18,200, it means you would have to pay $5,460 to the Australian Taxation Office (ATO) at the end of the financial year.
Source: https://www.ato.gov.au/Rates/Individual-income-tax-rates/
So, as you can see, having a Student Visa and studying for more than six months can save you thousands of dollars… it’s well worth considering one of our longer courses to minimize your tax.
If you are a Work and Holiday Maker, you will have to pay 15% from the first dollar you earn. If you earned $18,200 within the financial year, you will have to pay $2,730 to the ATO.
But here’s something important: these rates only apply if your employer is registered with the ATO as a Working Holiday Maker employer.
It is a good idea to check if your employer is registered, because if they are not, you might be paying more tax than you need to.
Before deciding which type of visa you want to apply for and the length you wish to stay in Australia, take the time to think about it because it is an important decision.
YOUR VISA ALSO AFFECTS YOUR SUPERANNUATION
If you have been working as an employee in Australia, you get paid 12% of your salary as Superannuation. Superannuation is the system used for retirement in Australia and normally, you can’t access this money until you retire (normally when you are 65 years old). But if you don’t plan to stay here forever, you can claim this money back once you depart for your home country and your visa is no longer active (expired or cancelled).
The percentage of your Superannuation you will get depends on the type of visa you held:
- Work and Holiday / Working Holiday Visa: your superannuation will be taxed at 65%, so you’ll get around 35% of your balance back when you leave Australia.
- Student Visa: you’ll be taxed at 35%, which means you’ll get to keep about 65% of your superannuation.
Important: even if you’re no longer on a Working Holiday Visa, the 65% tax still applies if you held one at any point. You’ll still be classified as a Working Holiday Maker for the purposes of your superannuation refund.
Imagine you have $8,000 on your Superannuation Account once you depart Australia. After two years of working here:
- If you hold a Work and Holiday Visa in your first year + a Student Visa in your second year, you will receive 35% of the total amount ($2,800) once you depart Australia.
- If you have been on a Student Visa during these two years, you will get 65% of your Superannuation savings ($5,200) once you leave Australia.
If you have further questions, don’t hesitate to contact us.
