Axing the Tax

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One of the interesting things about the teaching exchange is the fact that, for the 12 months I am in Canada, I am not required to pay tax to the Australian government. The ATO made a ruling on this a few years back and decreed that as an exchange teacher, if you are out of the country for 183 days, plus some other logic that only accountants seem to understand, your tax liabilities for the year of the exchange actually end up with the Canadian government instead of the Australian government. Now, because the Australian tax year runs from July 1 to June 30 and I will be away for half of the year in two consecutive years, it means that I will only need to consider the income earned for half the year even though the rate of tax I pay for the half year I am here is predicated on the rate it should be as if I was here for the full year. If that sounds confusing, (and it does!) the bottom line is that I should get a decent refund for both the 05/06 and 06/07 tax years, since I will have basically paid too much tax during the times I was in Australia. I think I could make a good argument that we pay too much tax in Australia anyway, but that’s another issue altogether. Don’t get me started.

So instead, I pay tax to the Canadian government who, quite frankly, seem a lot more understanding about what they will allow and what they won’t in terms of tax deductions. More than that I don’t know, and that’s why we pay good accountants to work this stuff out for us.However, the interesting part is that you can’t just go up to your pay-person and say “stop taking my tax out please”. They want to know why, who authorised it, and why should they listen to you. Fair questions I guess. They can’t just not tax you, on your say-so, or I imagine everyone would try it.I assumed there would be an official form to fill out from the ATO, something that clearly indicated my desire to not have my PAYE tax removed from my pay each week. Nope. No such form exists it seems. So after a few phone calls and emails back and forth, it seems there is a “ruling” from the Tax Office that spells it all out quite clearly. I showed it to John, our school business manager, and he seemed to think it all looked legitimate and authorised Sharon, our paylady, to not withhold tax from my pay as from the end of January. So that’s how it’s done. Being in an independent school, it’s handy being able to just go downstairs and talk to these people to sort it out. God only knows how you’d do it in a DET school, or worse, a CEO school!

If you happen to be interested in this sort of thing, you can view the ruling here.

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