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Tax-free threshold for newcomers to Australia

If you're an Australian resident for tax purposes for a full year, find out about the tax-free threshold.

Last updated 25 June 2025

What is the tax-free threshold

If you're an Australian resident for tax purposes for a full year, you pay no tax on the first $18,200 of your income. This is called the tax-free threshold.

Adjusted tax-free threshold

If you became a resident of Australia for tax purposes during the income year, your tax-free threshold will be adjusted. Your tax-free threshold will be lower than the full year’s threshold available to most resident taxpayers.

Your adjusted tax-free threshold has 2 components:

  • a flat amount of $13,464
  • an additional $4,736 – apportioned for the number of months you were in Australia during the income year, including the month you arrived.

The Australian income year runs from 1 July to 30 June the following year. You need to calculate the number of months including the month you became a resident until 30 June, the end of the income year.

Example: tax-free threshold for part-year resident

John became an Australian resident on 17 April this year. This means his tax-free threshold is apportioned for 3 of the 12 months in the income year.

His tax-free threshold is:

= $13,464 + (($4,736 × 3) ÷ 12)

= $13,464 + $1,184

= $14,648

This means John won't pay tax on the first $14,648 of his taxable income for the income year. For any taxable income over $14,648, he will start to pay tax at the rate of 16%. The thresholds for the other tax rates will not change.

As John had a lower tax-free threshold than a resident for a full year, he will pay more tax on the same income if his taxable income exceeds $14,648. For subsequent years, John is a resident for the full year and is entitled to the full tax-free threshold.

End of example

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