What is the tax-free threshold?

Tax-Free Threshold

 

A tax-free threshold is the amount of income that you don’t have to pay tax on. More technically put, it is the upper limit of the lowest tax bracket, which has a tax rate of 0%. No one pays tax on the portion of their income that falls into this bracket. You only owe tax on your income that falls above the tax-free threshold.

 

For the 2016-2017 financial year, it remains the same as last year at $18,200. A tax-free threshold is equivalent to $350 weekly, $700 a fortnight and $1,517 monthly.  If your total annual income is less than $18,200 then you can claim the tax-free threshold from multiple payers.

 

The tax-free threshold only applies to Australian residents. However, all of your income is taxed if you are a nonresident. On the other hand, if your residency status changes halfway through the financial year, you will be able to claim a pro-rated tax-free threshold based on the number of weeks you were an Australian resident.

Leave a Reply

Your email address will not be published. Required fields are marked *