457 Visa Tax Time Hints (June 30, 2014)

Unlike most other countries, Australia’s financial year ends on June 30th. This means that it’s critical to have your finances in order before this date.

Here are four key tips for 457 visa holders to consider before June 30th, 2014:

1) Health Insurance
Most 457 visa holders will already have 457 visa health insurance but some individuals many have their cover lapse as they have received Medicare.

While Medicare may meet their condition 8501 health insurance requirement, it may also result in a net loss due to the Medicare Levy Surcharge.

The table below shows how there is a rebate in place for health insurance BUT this is only available for permanent resident.

The Medicare Levy Surcharge on the other hand is applicable for ALL Australian’s working in Australia (including 457 visa and 485 visa holders).

So this means that for example, if you don’t have health insurance and your earning $110,000 you will pay an extra 1,375.

Now consider the scenario of purchasing HIF (the cheapest 457 visa health insurance) at $958.80.
The net result is you have health insurance cover and actually have a net gain of +$416.20

It’s important to understand that getting overseas visitors health insurance will only make you exempt from the medicare levy surcharge if combined with reciprocal health cover. To get this (Medicare) you need to come from an eligible country and once you have receive your private health cover and arrived in Australia you can then apply for reciprocal health cover. This won’t necessarily provide any additional health treatment benefits but it may make you exempt from the Medicare Levy Surcharge.

2) Book in an appointment with an Australian accountant
While it may be tight to get an appointment with an accountant - it could be the best financial move you make this year!

The Australian Tax system is complicated and quite unique to others around the world. There are unique benefits and penalties within the system that only a professional knows.

An accountant can advise you now how you structure your tax either this financial year (or next one) to minimise your tax utilising different models such as unit trusts.

The accountant may also advise you to consider different actions in these final days of the 2013/14 financial year to reduce your tax.

3) Purchase work related items now
If there are work related expenses you incur such as uniform costs, computers or other elements you should consider purchasing them now, especially if you have had a solid financial year. These expenses (as long as they are work related) may be tax deductible and will reduce your overall tax.

Remember, you need to purchase these before June 30th and have a valid receipt if your going to make a claim on these items.

4) Superannuation
Australia has a number of super strategies that can be taken before June 30th. This really comes down to the amount you earn and specific circumstances but it may reduce your TAX as super is taxed at a different rate to normal income. While there is a set percentage that goes to Super you may consider topping this up before the end of financial year.

If there are two key points to take away from this page, they are: ensuring that before June 30th you have health insurance if you’re earning over $88,000 and to talk to an accountant about your options. Doing nothing could mean significant out-of-pocket expenses so it’s best to act now!