Tax-Free Threshold and How to Claim Them

Tax-Free Threshold and How to Claim Them

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Tax-free threshold is the amount of income which you do not have to pay tax for, and for Australian resident for tax purposes, this is the first $18,200 of your annual income. You can apply for a tax-free threshold by completing a Tax file number declaration (NAT3092), provided by your employer. If you are applying for Centrelink’s payment, you also need to fill this form to claim you tax-free threshold.

In the Tax file number declaration, you should choose “Yes” in question 8: “Do you want to claim the tax-free threshold from this payer?”, if you want to claim the tax-free threshold.

You have 28 days to complete the Tax file number declaration and give it to your employers. If you do not have or have forgotten your TFN, you can state in you Tax file number declaration form that you are making an application or enquiry to get your TFN. During these 28 days, you will be taxed at normal rates. However, if your employer does not receive the declaration form after 28 days, tax will be taken out of your payment at a rate of 49%.

Multiple payers

If you have two or more payers at the same time, you can only claim the tax-free threshold from your primary source of income, which means the payer who pays you the highest salary or wage.

This will also apply even if your total income for the year is less than the tax-free threshold of $18,200. In this case, your employer will deduct tax from your payment and you can claim them back at the end of the financial year.

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