What Is the Tax-Free Threshold in Australia?
If you are an Australian resident for tax purposes, the tax-free threshold is generally $18,200. This means the first $18,200 of your taxable income is generally free from Australian resident income tax.
The threshold applies across the financial year and across your total taxable income. It is not a separate $18,200 amount for each employer.
The tax-free threshold depends on your tax residency and total taxable income, not simply your visa type or how many jobs you have.
Who Can Claim the Tax-Free Threshold?
Australian residents for tax purposes are generally entitled to claim the tax-free threshold.
Tax residency is separate from immigration residency. You can be an Australian resident for tax purposes without being an Australian citizen or permanent resident.
Can International Students Claim the Tax-Free Threshold?
Some international students may be Australian residents for tax purposes depending on their circumstances and the relevant tax residency tests.
Being an international student does not automatically mean you can or cannot claim the threshold. Your tax residency needs to be considered.
Do not rely only on your student visa when deciding your tax residency. Australian tax residency is assessed under tax law and can differ from migration status.
Can Foreign Residents Claim the Tax-Free Threshold?
Foreign residents for Australian tax purposes are generally not entitled to the tax-free threshold and generally pay tax on Australian taxable income from the first dollar, subject to the applicable rules.
How Do You Claim the Tax-Free Threshold?
When you start a job, you generally provide tax information to your employer, including whether you want to claim the tax-free threshold from that payer.
Claiming the threshold affects how much PAYG withholding your employer takes from your salary or wages during the year.
Does Claiming the Threshold Mean You Pay No Tax?
Not necessarily. Claiming the threshold changes withholding during the year, but your final tax liability is calculated from your taxable income when your tax return is assessed.
Other jobs, ABN income, investment income and other taxable income can affect the final result.
What Happens If You Have Two Jobs?
If you receive income from more than one job, the ATO generally says you should claim the tax-free threshold from only one employer.
This helps reduce the chance that too little tax is withheld across your combined income.
Two Jobs at the Same Time
A worker claims the tax-free threshold from Job A and Job B. Each employer calculates withholding as though its payments are the worker's main income.
When both incomes are combined at tax time, the worker may find that insufficient tax was withheld and a tax bill may arise.
Can You Ever Claim It From More Than One Employer?
ATO guidance allows an Australian resident to claim the tax-free threshold from more than one payer in limited circumstances where total income from all sources for the financial year is expected to be $18,200 or less.
If total income is likely to exceed the threshold, claiming it from multiple payers can increase the chance of under-withholding.
Which Employer Should You Claim It From?
Many people claim the threshold from their main payer. The key goal is to have withholding that reasonably reflects your overall income situation.
If your work situation changes significantly, review the withholding information you have provided to your employers.
What If You Claimed the Threshold From Two Employers by Mistake?
You should review the situation as soon as practical. If too little tax is being withheld, you may end up with tax payable when you lodge your return.
What If You Did Not Claim It From Any Employer?
More tax may be withheld during the year than necessary. If your final tax liability is lower than the amount withheld, the difference may contribute to a refund after assessment, depending on your full tax circumstances.
What Happens If You Earn Less Than $18,200?
If you are an Australian resident for tax purposes and your taxable income is within the tax-free threshold, you may have little or no resident income tax liability.
Whether you still need to lodge a tax return can depend on tax withheld, other income and other circumstances.
Tax-Free Threshold vs PAYG Withholding
| Term | Meaning |
|---|---|
| Tax-free threshold | The first $18,200 of taxable income is generally tax-free for an Australian resident for tax purposes. |
| PAYG withholding | Tax your employer withholds from salary or wages and pays to the ATO during the year. |
| Tax return | Your annual return brings together relevant income, deductions and tax already withheld. |
| Tax refund | May arise where tax paid or withheld exceeds the final amount payable after assessment. |
What Are the 2026–27 Resident Tax Rates?
For the 2026–27 income year, the legislated resident rate on taxable income above the tax-free threshold and up to $45,000 is 15%.
The next resident marginal rate is 30% for taxable income above $45,000 up to $135,000, with higher rates applying above that. The tax-free threshold remains $18,200.
Does ABN Income Count Towards the Tax-Free Threshold?
Yes. Relevant taxable income earned as a sole trader or through work performed under an ABN contributes to your overall taxable income.
This matters if you have an employee job and also earn delivery, rideshare, freelance or other sole trader income.
What About Cash Jobs?
Taxable cash income still contributes to your taxable income. Being paid in cash does not create a separate tax-free amount.
What If You Change Jobs During the Year?
Changing jobs does not give you a new $18,200 threshold. The threshold applies to your overall taxable income for the financial year.
What If You Are a Part-Year Resident?
If you become or stop being an Australian resident for tax purposes during the financial year, a part-year tax-free threshold may apply rather than the standard full-year amount.
Tax-Free Threshold for Nepali Students Working Part-Time
Nepali students often work casual or part-time jobs while studying. If you are an Australian resident for tax purposes, the threshold may apply, but income from all taxable sources needs to be considered together.
Tax-Free Threshold for Nepali Workers With Multiple Jobs
Hospitality, cleaning, aged care, construction, rideshare and other workers may have more than one source of income. Even if each individual job pays a modest amount, the combined income can exceed the tax-free threshold.
Common Tax-Free Threshold Mistakes
- claiming the threshold from several employers when combined income exceeds $18,200
- assuming visa status automatically determines tax residency
- forgetting ABN or side income when estimating total taxable income
- thinking a new job creates a new $18,200 threshold
- confusing PAYG withholding with final tax liability
- ignoring a change in tax residency during the year
What Should You Check Before Lodging?
- your tax residency for the financial year
- income statements from all employers
- ABN, platform, cash and other taxable income
- total PAYG withholding
- whether you claimed the threshold from more than one payer
- whether your residency changed during the year
How Hamro Accountant Can Help
Hamro Accountant can help Nepali workers and students across Australia understand how tax residency, multiple jobs, PAYG withholding, ABN income and other income affect their Australian tax return.
This can be particularly useful if you are new to Australia, studying while working, working multiple jobs or unsure whether you claimed the threshold correctly.