Australia Tax-Free Threshold Guide
the Australian tax-free threshold. The guide covers: the tax-free threshold (the "tax-free threshold of $18,200") — the individual Australian resident can earn up to $18,200 in the taxable income in the income year without paying the income tax (the "nil tax bracket" for the first $18,200); the taxpayer must claim the tax-free threshold through the "TFN declaration" (the "Tax file number declaration") provided to the employer at the commencement of the employment; the employer uses the tax-free threshold to calculate the "PAYG withholding" — if the taxpayer claims the tax-free threshold, the employer does not withhold the tax on the first $18,200 of the earnings; the second job and the multiple employers (the "only one employer can apply the threshold") — the taxpayer can claim the tax-free threshold from only one employer at a time (the "primary employer"); for the second job (the "secondary employer"), the taxpayer must not claim the tax-free threshold — the secondary employer must withhold the tax on the entire earnings from the second job at the higher rate (the "no tax-free threshold" rate on the TFN declaration); the taxpayer who fails to notify the secondary employer may incur a tax shortfall at the end of the income year (the "under-withholding" — the tax withheld is less than the total tax liability); the non-residents (the "foreign residents") — the non-resident individual cannot claim the tax-free threshold; the non-resident pays tax on the entire taxable income from the Australian sources at the non-resident rates (the "flat rate of 30%" to the "top marginal rate of 45%" from the first dollar of the income); the non-resident must provide the TFN declaration to the employer with the "foreign resident" status — the employer withholds at the "foreign resident" rate (the "no tax-free threshold" rate); the working holiday makers (the "417 visa and the 462 visa") — the working holiday maker is taxed at the special "working holiday maker tax rates" (the "15% on the first $45,000", then the marginal rates up to 45%); the working holiday maker can earn up to $45,000 at the 15% rate, but the $18,200 tax-free threshold does not apply to the working holiday maker; the employer must withhold at the "working holiday maker" rate using the "Withholding declaration" (the "NAT 3093" form).
Claiming the Tax-Free Threshold
- TFN declaration: The taxpayer claims the tax-free threshold by completing the "Tax file number declaration" (the "NAT 3092" form) and providing it to the employer. The taxpayer must tick the box "You want to claim the tax-free threshold from this employer" on the declaration. The taxpayer can claim the threshold from only one employer at a time.
- Changing the employer: If the taxpayer changes the employment, the taxpayer can claim the tax-free threshold from the new employer (the "primary employer"). The taxpayer must complete the new TFN declaration for the new employer. The taxpayer does not need to cancel the previous declaration with the former employer — the former employer ceases to apply the threshold after the employment ends.
- Married or de facto couples: Each partner claims the tax-free threshold independently. The tax-free threshold is not shared between the spouses. Each partner must earn under $18,200 to benefit from the nil tax bracket.
For the TFN application and the TFN obligations, see our TFN Guide →.
Non-Residents and Working Holiday Makers
- Non-residents — no threshold: The non-resident individual (the "foreign resident for tax purposes") does not qualify for the $18,200 tax-free threshold. The non-resident pays tax at the non-resident rates from the first dollar of the Australian-sourced income. The non-resident rate for the 2024-25 income year: 30% up to $135,000, then the marginal rates up to 45%.
- Working holiday makers — special rates: The working holiday maker (the "holder of the subclass 417 or 462 visa") is taxed at the special rates under the "Working Holiday Maker (WHM) tax framework". The WHM rate: 15% on the taxable income up to $45,000, then the standard marginal rates above $45,000. The $18,200 tax-free threshold does not apply to the WHM income.
- Temporary residents: The temporary resident (the "holder of the temporary visa, such as the 482 visa or the 485 visa") who is an Australian tax resident can claim the tax-free threshold. The temporary resident must meet the residency tests to be treated as the Australian resident. The temporary resident claiming the threshold must provide the TFN declaration with the "Australian resident" status.
For the residency rules and the tax treatment of the foreign residents, see our Non-Resident Taxation Guide →.