Australia uses a progressive tax system to tax individuals working and earning income in Australia. This means that the rate of tax payable increases as taxable income increases. Your employer will subtract the tax from your wages before paying you and pay it to the Australian Taxation Office on your behalf.
The financial year for Australia runs from the 1st of July to the 30th of June.
The Australian Taxation Office (ATO) is the revenue collection agency of the Australian Government. The ATO collects taxes for the Australian Government to provide good quality systems and services related to health, education, and community facilities.
It is free and easy to apply for a TFN online. It takes approximately 10 to 28 days for the ATO to finalise your Tax File Number. You must provide your employer with your TFN 28 days after your employment date at the latest. Otherwise, you will pay 47% of any payment you earn to a resident employee and 45% from a foreign resident employee (the highest possible tax rate).
Everyone who earns income in Australia must obtain a Tax File Number (TFN). Your TFN is a personal identification number and stays the same even if you decide to switch occupations, move interstate, or go overseas.
Click on the link below to register your Tax File Number with the ATO.
Apply for a TFN | Australian Taxation Office
It is essential to get a tax refund if you pay tax towards the end of the financial year or if you have been charged at the incorrect rate. Hence, it is crucial to look carefully and use the correct tax code.
The table below displays the five income tax brackets for Australia’s 2022-2023 tax year. These rates show the amount of tax payable in every dollar for each income tax bracket, depending on an individual’s circumstances.
Resident income tax rates – 2023-2024
| Taxable Income | Tax on this income |
| Up to AUD $18,200 | Nil |
| AUD $18,201 and up to AUD $45,000 | $0.19c for each $1.00 over AUD $18,200 |
| AUD $45,001 and up to AUD $120,000 | AUD $5,092 plus $0.325c for each $1.00 over AUD $45,000 |
| AUD $120,001 and up to AUD $180,000 | AUD $29,467 plus $0.37c for each $1.00 over AUD $120,000 |
| Remaining income of over AUD $180,001 and over | AUD $51,667 plus $0.45 for each $1.00 over AUD $180,000 |
Resident income tax rates – 2024-2025
| Taxable Income | Tax on this income |
| Up to AUD $18,200 | Nil |
| AUD $18,201 and up to AUD $45,000 | $0.16c for each $1.00 over AUD $18,200 |
| AUD $45,001 and up to AUD $135,000 | AUD $4,288 plus $0.30c for each $1.00 over AUD $45,000 |
| AUD $135,001 and up to AUD $190,000 | AUD $31,288 plus $0.37c for each $1.00 over AUD $135,000 |
| Remaining income of over AUD $190,001 and over | AUD $51,637 plus $0.45 for each $1.00 over AUD $190,000 |
Remember that the above rates do not include the Medicare levy of 2%.
Foreign resident tax rates – 2023 – 2024
| Taxable income | Tax on this income |
| Up to AUD $120,000 | $0.325c for each $1.00 |
| AUD $120,001 and up to AUD $180,000 | AUD $39,000 plus $0.37 for each $1.00 over AUD $120,000 |
| Remaining income of over AUD $180,001 | AUD $61,200 plus $0.45 or each $1.00 over AUD $180,000 |
Keep in mind that these rates apply to individuals who are foreign residents for tax purposes.
Working holiday maker tax rates 2023 – 2024
| Taxable Income | Tax on this income |
| Up to AUD $45,000 | 15% |
| AUD $45,001 and up to AUD $120,000 | AUD $6750 plus $0.32 for each $1.00 over AUD $45,000 |
| AUD $120,001 and up to AUD $180,000 | AUD $31,125 plus $0.37 for each $1.00 over AUD $120,000 |
| Remaining income of over AUD $180,001 | AUD $53,325 plus $0.45 for each $1.00 over AUD $180,000 |
These rates apply if you obtain a Visa Subclass 417 (Working Holiday) or Visa Subclass 462 (Work and Holiday).
Source: Australian Taxation Office
You can also use a simple tax calculator to help you calculate the tax on your taxable income. This gives you an estimate of your tax refund or debt and takes Medicare levy, higher education scheme repayments, tax offsets and tax credits into account.
Income Tax Estimator | Australian Taxation Office
Good and Services Tax (GST)
Also known as GST, the Goods and Services Tax is a tax on most goods and services in Australia. This includes goods, certain imported services, and general food, equipment, and activities. The GST has a broad-based tax of 10%, indicating that this rate is added to the price of goods and services purchased in Australia. The only exceptions when GST is not applied include airfares for travelling, financial services, mortgage payments, and residential rents.
Australia Tax System features
Australia’s overall tax burden is considered relatively low compared to other developed countries across the globe. It also supports fairness, as Australia’s tax system is highly progressive.
Tax exemptions
The majority of migrants and people living in Australia are considered tax residents in Australia for income tax purposes regardless of their immigration status. Those on a temporary resident visa do not have to pay taxes on their income from Australia. However, it only applies if you acquire shares or rights under an employee share scheme.
Click on the link below to find out more about tax exemptions.
Income Tax Exemption | Australian Taxation Office
Tax treaties
Also known as a double tax agreement (DTA) or tax convention, a tax treaty is a formal bilateral agreement between two jurisdictions. It is possible to be a tax resident both in Australia and elsewhere. Hence, tax treaties are to avoid double taxation and provide security on tax laws that apply to international transactions and tax evasion. It also fosters cooperation between Australia and other tax authorities internationally by enforcing tax laws.
Click on the link below for a complete list of Australia’s tax treaties. It provides detailed information, including the country, application date, treaty status, and Australian domestic implementation.
