• Tax-free threshold – for individuals

    What is the tax-free threshold?

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    This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.

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    The tax-free threshold is the amount of money an Australian resident can earn before they pay income tax.

    What are the changes to the tax-free threshold?

    From 1 July 2012, under the government’s Household Assistance Package, the tax-free threshold increased from $6,000 to $18,200.

    This means if you earn less than $18,200 in a financial year, you do not need to pay income tax. If you earn more than $18,200 in a financial year, you will only pay income tax on your earnings over $18,200.

    Income tax rates 2014-15

    Taxable income

    Tax on this income

    0 to $18,200

    Nil

    $18,201 to $37,000

    19c for each $1 over $18,200

    $37,001 to $80,000

    $3,572 plus 32.5c for each $1 over $37,000

    $80,001 to $180,000

    $17,547 plus 37c for each $1 over $80,000

    $180,001 and over

    $54,547 plus 45c for each $1 over $180,000

    See also:

    What do the changes mean for you?

    If you have already submitted a Tax file number declaration to claim the previous tax-free threshold of $6,000, you do not have to do anything as your employer should have automatically adjusted to the new tax-free threshold of $18,200 from 1 July 2012.

    You will be asked to complete a TFN declaration if you:

    • have not submitted a TFN declaration
    • start work with a new employer
    • start to receive government benefits.

    If you want to claim the tax-free threshold, refer to your TFN declaration. At the question 'Do you wish to claim the tax-free threshold from this payer?' print X in the yes box. By doing this, you reduce the pay as you go (PAYG) withholding your employer must withhold from your pay.

    See also:

    Should you claim the tax-free threshold twice if you have more than one job at the same time?

    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 your 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.

    See also:

    How do you choose which employer to claim the tax-free threshold from?

    If you expect to earn more than $18,200, it is generally best to claim the tax-free threshold from the job you receive your highest income from.

    If you work and receive taxable government payments or allowances, can you claim the tax-free threshold?

    If you receive any taxable government payments or allowances, such as Newstart, Austudy or Youth Allowance, it is likely you are already claiming the tax-free threshold with that payment.

    If you are certain your total income for the financial year from all payers will be less than $18,200, you can claim the tax-free threshold on both your taxable government payments, and salary or wage income from your job.

    If you have earned less than the tax-free threshold during the financial year, what do you need to do?

    You need to work out if you must lodge a tax return.

    You must lodge a tax return if:

    • your payment summary shows you have had tax withheld
    • you have paid tax under the PAYG instalment system.

    If you are unsure if you need to lodge:

    If you are not required to lodge a tax return, we encourage you to complete a Non-lodgement advice.

    Our online calculator Do I need to lodge a tax return? for 2012–13 will be available after June 2013.

    More information

    These social media channels can provide more information on tax issues:

    Last modified: 01 Feb 2016QC 26058