How to claim the tax-free threshold
If you are an Australian resident for tax purposes, the first $18,200 of your yearly income is not taxed. This is called the tax-free threshold. When you start a job, your payer (employer) will give you a Tax file number declaration (NAT 3092) to complete. Centrelink is also a payer and they will give you this form if you apply for their payments.
You tell your payer you want to claim the tax-free threshold by placing X in the Yes box at question 8 'Do you want to claim the tax-free threshold from this payer?’
You have 28 days to give your payer a completed Tax file number declaration with your tax file number (TFN) on it or to claim an exemption from quoting a TFN. You can claim an exemption if you do not earn enough income to pay tax and you are under 18 years old.
After that time, your payer must start taking tax out of your pay at a rate of 49%.
If you don’t have or have forgotten your TFN, you can indicate on the Tax file number declaration that you are making an application or enquiry to get your TFN. This will mean your payer will tax you at the normal rates for 28 days.
However, if you have not provided your TFN at the end of the 28 days, they must start taking tax out of your pay at a rate of 49%.
What if you have more than one payer?
If you have more than one payer at the same time, we generally require that you only claim the tax-free threshold from the payer who usually pays the highest salary or wage (this is known as the primary source of income).
If you earn additional income (for example, from a second job or a taxable pension), your second payer is required to withhold tax at the higher 'no tax-free threshold' rate. If your second payer does not withhold a higher rate of tax, this may lead to a tax debt at the end of the financial year.
However, if you are certain your total income for the year will be less than $18,200 you can claim the tax-free threshold from each payer.
Explains how to claim the tax-free threshold when you complete a tax file number declaration.