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.
First, the 2018 tax-free threshold has a limit of $18,200. It hasn’t changed since last tax season. It is equivalent to:
- $350 a week
- $700 a fortnight
- $1,517 a month.
Like many taxpayers, you may have two jobs. Typically, if your annual income from all of your employers is less than $18,200, you have an advantage. Then, you can claim the tax-free threshold from each payer.
If you have two jobs, click here to find out how you determine if you can claim the tax-free threshold.
Can I claim the tax-free threshold if I earn more than $18,200?
Yes, you can ONLY if you are having too much withheld from your pay. Ensure that you are certain that your tax withholding is more than what you should be paying by checking your tax rates.
You can apply for a reduction in your tax withholding by clicking here.
There are special circumstances.
Are you a part-year resident, and meet either one of the following to qualify for a portion of your income to be tax-free?
- You had the intention to reside in Australia during the year.
- You left Australia with the intention to reside overseas during the year.
This means that your tax-free threshold of $18,200 is reduced.
For example, here’s a do it yourself calculation to compute your tax-free threshold.
As you can see here, your tax-free threshold will be at least $13,464. The leftover $4,736 will be calculated with the number of months you were a resident to determine your tax-free threshold for 2018.
Choose E-Lodge for your tax needs.
Now that you know if you’re eligible for the 2018 tax-free threshold, start working on your 2017-2018 tax return! Create an account now and start early this tax season.
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