How to reduce your Australian taxes?
Are you going to file your income tax return yourself?
This moment can generate several doubts, among them, how not to pay that extra % that appears at the end of your statement as "Medicare Levy" and that we don't even know what it is.
The Medicare fee is 2% of your taxable income, in addition to the tax you pay on what you have received in the year. However, international students do not have access to Medicare and do not have to pay taxes for the service, since they pay for private health insurance.
Even so, the ATO system automatically charges this amount to everyone, unless you mark that you are exempt from this fee. But how do you do that?
After 3 years in Australia, doing my own return, I have learned a few tricks that I am going to share with you. And the first of them is what to do to get rid of the Medicare Tax.
1. Go to this website and open the PDF form provided. It should have this header
2. Fill in the form with your personal data and following the instructions on the parts to be filled in (please note that depending on what you answer in some questions the form may ask you to skip certain sections and go directly to other sections).
3. How do I answer question 19 about the claim period?
The fiscal year you are requesting is always the one that has just ended, that is, from July 1 of last year to June 30 of the current year.
4. Sign and date the form where indicated.
5. Send the form along with your documents to mes@servicesaustralia.gov.au.
Which documents are required?
I recommend sending your passport, valid visa and health insurance certificate (all documents MUST BE IN PDF).
They can take up to 6 weeks to respond, so it is recommended to apply for the tax exemption before the beginning of the tax year in order to be able to file your tax return as soon as possible.
The response to the Medicare tax exemption request arrives in the mail and is a letter/statement stating that you do not have to pay this tax.
Okay Fernanda, but now what do I do with this?
Now you should proceed with your Income Tax Return application in the normal way and when you get to the question about the Social Security levy, something like this:
You must answer yes. International students are exempt from Medicare, i.e., they are not entitled to the benefit.
The system will ask you how many days in the previous tax year you fell into this category, and this part may be a little strange, or difficult for you. But let's say it was all 365 days of the year, after all, there was no Medicare for you at any time, right?
Next, you will be asked if you have already applied for the "Declaration of Medicare Fee Waiver"/Declaration of Medicare Entitlement. And if you have correctly followed the above steps, you have applied and can answer yes to the question.
That’s all folks!
After following these steps you probably won't see that extra amount in your Treasury. Try it and let me know if it worked for you too!
If you have any questions, I love meeting new students and helping out, just send me a message or click on the whatsapp icon on the side and I'll be happy to help.
Remembering that I am not an accountant in Australia, I just have my own experience and I like to share it to help other people. If you choose to do your tax return with an accountant, they will probably do this for you, without you having to send or fill in anything.
