Blog

Getting to know your credit score

0

Your credit score is an important number in your life as it can affect many financial aspects of your life. The three-digit number is a representation of your credit history, based on an analysis of your credit file, that helps a lender determine your credit worthiness. When an individual applies for a loan, such as a mortgage or car loan, the provider will use a credit score to help them decide whether to lend the money, the amount to lend and the interest rate.

An individual’s credit score is calculated by credit reporting agencies who collect financial and personal information and document it on a credit report. The information is then used to calculate your credit score. Areas agencies assess are;

  • Your personal details; age location, etc.
  • Types of credit providers previously used; bank, utility company, etc.
  • The amount of credit borrowed.
  • The number of credit applications and enquiries made.
  • Any unpaid or overdue loans or credit.
  • Any debt agreements or personal insolvency agreements relating to bankruptcy.

A credit score is rated on a five-point scale with the position of your credit score on the scale helping lenders work out how risky it is for them to lend to you:

  • Excellent: highly unlikely to have any events harming your credit score within the next 12 months.
  • Very good: unlikely to have a negative event in the next 12 months.
  • Good: less likely to experience a negative event in the next year.
  • Average: likely to experience a negative event in the next year.
  • Below average: more likely to have a negative event in the next year.

Credit scores can change over time whether or not you have changed your personal spending habits. Applying for a new loan or credit card, changes to your credit limit on an existing loan or credit account or late repayments are some of the things that can affect your credit score. In turn, your credit score can affect mortgage rates, bill rates and whether or not you are approved for certain utility companies.

To prevent a negative credit score, individuals should try to spread applications over a larger amount of time; lower credit card limits; ensure their credit card is paid in full each month; and pay their rent, utilities and other loans on time.

Hiring working holiday makers

0

In Australia, there are approximately 100,000 working holiday makers employed each year. Any employer can hire working holiday makers provided they meet the requirements to do so. Employers must confirm the working holiday maker has a valid visa subclass, either 417 (Working Holiday) or 462 (Work and Holiday).

Register:
Employers will need to register to apply the 15% working holiday maker tax rate and declare they are aware of the obligations associated, including complying with the Fair Work Act 2009. Working holiday makers can’t claim the tax-free threshold and must provide their tax file number (TFN). Employers who do not register must withhold tax at 32.5% from every dollar earned up to $87,000 and foreign resident withholding rates apply to income over $87,000. Those who do not register may be subject to penalties.

Working holiday maker tax rate:
Once registered, employers can withhold 15% from every dollar that a working holiday maker earns up to $37,000. Tax rates change for amounts above this. The tax rate applies to all payments made to working holiday makers, including:

  • Salary and wages.
  • Termination payments.
  • Unused leave.
  • Back payments, commissions, bonuses and similar payments.

Super payments:
Eligible workers are entitled to receive super payments from their employers. When leaving Australia, working holiday makers can apply to have their super paid to them as a Departing Australia Superannuation Payment (DASP). The tax on any DASP made to working holiday makers on or after 1 July 2017 is 65%.

Payment summary:
Unless reporting through Single Touch Payroll, employers are required to provide a payment summary to every working holiday maker they employ. All payments to a working holiday maker must be shown in the gross income section of the payment summary and identified using H in the gross payment type box. This is to help your worker to prepare their income tax return. Employees who previously held a working holiday visa but do not anymore will need two payment summaries for the financial year, one for the period they held a 417 or 462 visa and the period when they did not.

Super for different visas

0

Australian employers are required to pay super to their employees when they earn $450 a week or meet specific criteria based on age or industry. Employer requirements can get confusing however when dealing with international workers or sending employees overseas. Here are the requirements employers must follow when handling super payments to workers with different visas.

Temporary residents:
Temporary residents working in Australia may be eligible to receive super from their employer. Eligibility criteria is the same as it would be for a permanent Australian resident, you must be 18 years or older and have been paid $450 or more (before tax) in a month. Working holiday makers holding a 417 (Working Holiday), 462 (Work and Holiday) or an associated bridging visa can access the super paid as a departing Australia superannuation payment (DASP).

Employees working overseas:
For an Australian employee sent to work overseas, their employer must continue to pay super contributions in Australia for them. The other country may require the employer or employee to pay super there as well if Australia does not have a bilateral agreement with that country. To gain exemption from the super payment in the other country, the employer needs to show the authorities in the other country a certificate of coverage gained from the ATO.

Employees not eligible for super:
There are some international employees that will not be entitled to receive super payments from their employer. These include:

  • Non-resident employees that are paid for work they do outside Australia.
  • Some foreign executives who hold certain visas for entry permits
  • Employees temporarily working in Australia who are covered by a bilateral super agreement. Employers must keep a copy of the employee’s certificate of coverage to verify this arrangement.

Pin It on Pinterest

Share This