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Tax-Free Threshold In Australia
taxes

What is the Tax-Free Threshold In Australia

Australian taxpayers have a tax-free threshold for earnings which effectively allows earning a certain amount of money before paying taxes. It's known as the tax-free threshold. If you earn less than the threshold, you do not need to pay tax. If you earn over the threshold, you will need to pay tax on the excess. 

What Is The Tax Threshold in Australia? 

The first $18,200 of income is tax-free, and it breaks down to a monthly salary of $1,517, a fortnightly wage of $700 or a weekly wage of $350. 

How Does the Tax-Free Threshold Work If Someone Has Two Jobs 

When an individual starts a job with a new employer, they are required to complete the Tax File Number Declaration Form. This advises the employer that you wish to claim your tax-free threshold from this payer. 

Question 9 in the form asks whether you want to claim the threshold and by answering yes, you signify that you do. If you work multiple jobs, you should choose yes on the TFN form for the highest paying position. You cannot claim for more than one job. If you do, the withholding tax will not be sufficient. At the end of the financial year, when you file your tax returns you will end up in tax debt. 

Holding two positions can sometimes cause people to fall into a tax trap, even if all parties do the right thing according to the Australian Taxation Office's rules. The first job is generally given the tax-free threshold and any subsequent positions are not. If the second (or third) position ends up attracting a higher salary or wage, it causes underpayment of taxes which can result in a tax bill.

Grow Your Business with QuickBooks

Frequently Asked Questions about the tax-free threshold

QuickBooks can help you on tax time

Whether you're a tax advisor or a small business owner, QuickBooks Tax Software can help you manage the tax system with ease. 

With QuickBooks, you can streamline your BAS and tax workflows. With access anytime, anywhere, and all the forms you need, and free access when you sign up to QuickBooks Online Accountant

You can import data from QuickBooks, Excel, MYOB, and Xero which saves you time and the hassle of data entry. Your clients can sign electronically to shorten the turnaround time and easily reconcile accounts. 


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