Every year, around 667,000 people move to Australia, many for work, others to study, and some to spend an extended period of time travelling around the country. Then there are those who come Down Under to start a new life.
Regardless of your motivations for moving to the ‘Lucky Country’, it is important to take into account the financial implications involved in doing so.
Australia has complex banking and tax systems to get your head around, while the cost of living might be different to what you are currently used to in your home country.
If you are not currently familiar with them, they can catch you off guard. That’s why we’ve put together this guide of the essential financial aspects to consider in the lead-up to and after your move.
Setting Up a Bank Account in Australia
As soon as you arrive, opening a bank account in Australia should be one of your top priorities.
The country has a well-established banking system, with its ‘Big Four’ banks being ANZ, the Commonwealth Bank, NAB, and Westpac, along with numerous smaller banks, such as the Bank of Queensland, Bendigo Bank, Suncorp, and Bankwest.
It also has a growing network of online banks, such as Macquarie and ING, within its banking landscape.
1. Types of Bank Accounts
All banks offer at least two main types of accounts. Most people have a transaction account, which is used for everyday banking, including receiving salary payments, paying bills, and making purchases.
Many others also have a savings account, which is designed to help them grow their savings. As an incentive to take them out, these types of accounts usually come with interest payments from the bank, which often is at an increasing rate if you meet minimum deposit requirements.
Both types of accounts usually come with online access – or internet banking as it is called in Australia.
2. What You Need to Open an Account
To open a bank account, you will typically need the following:
- A valid passport
- Australian visa or proof of residency
- Australian address (temporary or permanent)
Many banks allow you to open an account online before you arrive in Australia, which makes it easier to transfer funds across from your home country and access your money once you land.
Understanding the Australian Tax System
If you plan to work in Australia, you must pay tax. The country has a progressive tax system, which means the more you earn, the higher the percentage of tax you pay.
The Australian Taxation Office (ATO) is responsible for the collection and administration of tax. Here are some key points you need to know:
1. Tax File Number (TFN)
You can’t work in Australia without a Tax File Number (TFN), which is a unique identifier that is issued by the ATO.
Having this number is essential because it is illegal to accept paid employment without it, and it ensures you are being taxed at the correct rate.
Without a TFN, you may be taxed at the highest rate of 45%.
2. Income Tax Rates
The income tax rates in Australia vary depending on your residency status and how much you earn every year. As of 2024, the tax brackets for residents are:
- $0 – $18,200: Tax-free
- $18,201 – $45,000: 19%
- $45,001 – $120,000: 32.5%
- $120,001 – $180,000: 37%
- Over $180,000: 45%
If you are a non-resident, you will be taxed at a flat rate starting at 32.5% from the first dollar you earn.
3. Superannuation
Superannuation is a pension fund, and it is mandatory to have one in Australia. Moreover, employers in Australia are required to contribute a minimum of 11% of your salary to your superannuation (super) fund.
These funds are designed to support you financially in retirement, and there are many companies that run them, including AustralianSuper, Cbus, and Hesta.
If you are on a temporary visa and leave Australia permanently, you may be able to claim your superannuation back through the Departing Australia Superannuation Payment (DASP) scheme.
4. Lodging a Tax Return
The Australian financial year runs from 1 July to 30 June, and everyone who works is obligated to fill out a tax return. Doing so allows you to claim deductions and may result in you receiving a tax refund if you have overpaid throughout the year.
Here is some further information about how to lodge your first tax return.
Cost of Living in Australia
The cost of living in Australia varies depending on where you choose to live. As in most countries, cities are more expensive to live in than rural areas. Additionally, some states, like New South Wales and Victoria, are dearer than others, like Tasmania and Western Australia.
When budgeting for your new life, you will need to factor in certain expenditures, including rent and mortgage, which are relatively high in Australia.
The median weekly rent is $627, while the median house price is $814,293. However, this price increases if you live in cities or coastal areas.
On top of rent, you’ll need to factor in expenses such as electricity, gas, water, and internet. Groceries and dining out are other areas you should account for, both of which are more expensive than in Southeast Asia but are on par with many Western countries.
Something else you might want to budget for is private health insurance. Although the country’s Medicare system covers basic medical services and hospital treatments for Australian residents and eligible visa holders, it does not cover dental, optical, or physiotherapy, which can be very expensive.
