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What is the tax-free threshold for 2018?

tax-free threshold 2018
The first $18,200 of your yearly income is not subject to tax.

That sounds great, doesn’t it? This is known as the tax-free threshold. However, this only applies if you’re an Australian resident for tax purposes.

You can claim the tax-free threshold to reduce your tax withholding during the year. Find out if you’re eligible by reading on.

Here’s a breakdown of the 2018 tax-free threshold.
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Backpacker’s Guide to Australian Tax

You’re a backpacker. That puts you somewhere between a tourist and a…resident?

Actually, yes. The Australian Tax Office may consider you an Australian resident for tax purposes under certain circumstances. As a backpacker, there are some other things you should know as well that could affect your tax return. We know you’re out and about so let’s not waste time getting down to the most frequently asked questions.


Are you a resident for tax purposes?

This sounds like a trick question. You don’t have a permanent residence here. Your family doesn’t necessarily live here. You left your dog with your mom when you came here. However, when it comes to taxes, residency is based on what you do while you’re touring the country. As a resident, you are able to lodge a tax return and claim tax back. If you are deemed a nonresident, then you are not eligible for a refund.

Generally speaking, the ATO considers you a resident for tax purposes if ANY of the following applies:

  • You have always lived in Australia.
  • You moved to Australia and live here permanently.
  • You have been in Australia for at least six months, and for most of the time, you have been working the same job and living at the same place.
  • You have been in Australia for more than half of the financial year, unless your usual home is overseas and you do not intend to live in Australia.

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What Is the Tax-Free Threshold?

Step into this financial year with a fuller wallet. Claim the tax-free threshold.

The tax-free threshold marks the upper limit (or the cap) of the lowest tax bracket, which has a tax rate of 0%. In other words, the ATO states that you don’t have to pay any tax on the portion of your income that falls below this tax-free threshold. Above the threshold, you enter the second tax bracket and must start paying tax on your income.

For the 2015-2016 financial year, the tax-free threshold is $18,200. This means that your total income is not taxed up to $18,200. Broken down, this translates into:

  • $350 per week
  • $700 per fortnight
  • $1,517 per month


Part-Year Resident of Australia

The tax-free threshold applies to most Australians and some other residents. But nonresidents do not get a tax-free threshold and are taxed on all of their Australian income. Read the rest of this entry »