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# Tax-free threshold for newcomers to Australia

If you're an Australian resident for tax purposes for a full year, find out about the tax-free threshold.

Last updated 26 June 2023

## What is the tax-free threshold

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

If you entered with the intention of residing in Australia duringthe income year, 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.

• a flat amount of \$13,464
• an additional \$4,736 – apportioned for the number of months you were in Australia during the income year, including the month you arrived.

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

## Example of part-year resident tax-free threshold

Start of example

Example – tax-free threshold for part year resident

John became an Australian resident on 17 April this year. This means he has been in Australia for 3 of the 12 months in the income year.

His tax-free threshold is:

= \$13,464 + ((\$4,736 × 3) ÷ 12)

= \$13,464 + \$1,184

= \$14,648

This means John won't 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 subsequent years, John is a resident for the full year and is entitled to the full tax-free threshold.

End of example

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