Understanding the Tax-Free Threshold in Australia

The tax-free threshold in Australia allows you to earn up to $18,200 annually without paying any income tax. This threshold is designed to reduce the tax burden on low-income earners. If your total taxable income exceeds this amount, you'll only pay tax on the income above $18,200.

Key Points About the Tax-Free Threshold

• Eligibility: Australian residents for tax purposes automatically qualify. For more details, visit the ATO page on residency for tax purposes
• Claiming the Threshold: You can claim the tax-free threshold through your employer by completing a Tax File Number (TFN) declaration form. Learn how to claim on the ATO website
• Multiple Jobs: Only claim the tax-free threshold on one job at a time to avoid a potential tax debt. Refer to the ATO's guidance on multiple employers and the tax-free threshold

The tax-free threshold not only affects how much tax you pay but also determines whether you need to lodge a tax return. Even if you earn below $18,200, you may still need to lodge a return if you’ve had tax withheld.

FAQs

What happens if I don’t claim the tax-free threshold?

If you don’t claim the tax-free threshold, your employer will withhold more tax than necessary. However, you can claim the excess back when you lodge your tax return. Learn more about over-withheld tax

Can I claim the tax-free threshold on multiple jobs?

No, you can only claim it on one job at a time. If you have multiple employers, choose the one where you earn the most. The ATO explains this process here