Tax-free threshold for newcomers to Australia

Did you arrive in Australia permanently this year?

If you are an Australian resident for tax purposes for a full year, you will pay no tax on the first $18,200 of your income. This is called the tax-free threshold.

If you entered Australia during the financial year with the intention of staying permanently, your tax-free threshold will be adjusted. Your tax-free threshold will be lower than the full year's threshold available to most resident taxpayers.

Your adjusted tax-free threshold will have two components:

• The first is a flat amount of $13,464.
• The second is an additional $4736, apportioned for the number of months you have been in Australia during the year, including the month you arrived.

The Australian financial year runs from 1 July to 30 June the following year. You therefore need to calculate the number of months from the month you arrived until 30 June, the end of the income year.

Example

John became an Australian resident on 17 April this year. This means he has been in Australia for three months in the income year. His tax-free threshold is therefore:

= $13,464	+	($4,736 x 3) 12
= $13,464	+	$1,184
= $14,648

This means John will not have to pay tax on the first $14,648 of his taxable income for the income year. For any taxable income over $14,648, he will start to pay tax at the rate of 19%. The thresholds for the other tax rates will not change.

As John had a lower tax-free threshold than a resident for a full year, he will pay more tax on the same income if his taxable income exceeds $14,648. This only happens once - for each subsequent year John is a resident he will be entitled to the full tax-free threshold.

More information

For more information, refer to:

• Part-year tax-free threshold
• Individual income tax rates.