Filing your income tax in Australia

This guide to income tax in Australia explains all about your filing requirements, as well as touching on topics such as tax rates and tax refunds. It also details how services such as Wise can help international taxpayers with services such as low-cost transfers and multi-currency accounts.

Income tax in Australia: overview and latest developments

Australia has a progressive income tax system, which means the more you earn, the higher your tax rate. If you live in Australia or earn income there, you’ll usually need to file an annual tax return to declare the income you earned during the tax year.

Forms of income in Australia subject to taxation include:

• Salary and wages from employment or self-employment
• Bonuses, overtime payments, tips, and other payments for services
• Interest from savings accounts
• Investment income, such as dividends
• Rental income from property
• Some pension income
• Certain allowances, such as clothing and laundry allowances

In addition to income tax, most taxpayers pay the Medicare Levy, which is 2% of their taxable income. This helps fund the public healthcare system. The levy is a flat rate tax but has a slight progressive element, as high-income earners without private health insurance have to pay an additional surcharge (currently between 1-1.5%).

In addition to healthcare, income taxes in Australia help to fund a range of services including:

• Education
• Social welfare and pensions
• Infrastructure (roads, railways, and public transport)
• Defence and public safety
• Government administration

The Australian Tax Office (ATO) is the government agency responsible for administrating the national tax system, processing tax returns, and enforcing compliance.

Latest news about income taxes in Australia in 2025

Australia has an annual budget to announce tax measures for the forthcoming year. The date for the budget varies, but it is usually within the first half of the year.

The most recent budget was announced on 25th March 2025. Measures included:

• Cuts to income tax, including a reduction in the lowest rate of income tax from 16% to 15% in 2026, reducing further to 14% in 2027.
• Increasing the low-income threshold for the Medicare Levy by 4.7%.

Tax rates: how much tax will I pay in Australia in 2025?

There are two income tax rates in Australia: one for residents and one for non-residents.

Income tax brackets in Australia for residents in 2025-26 are:

Income tax bracket	Tax rate
Up to AUD 18,200	0%
AUD 18,201 – 45,000	16% (scheduled to reduce to 15% from 1 July 2026, and to 15% from 1 July 2027)
AUD 45,001 – 135,000	30%
AUD 135,001 – 190,000	37%
AUD 190,01 and over	45%

Tax brackets for non-residents in 2025-26 are:

Income tax bracket	Tax rate
Up to AUD 135,000	30%
AUD 135,001 – 190,000	37%
AUD 190,001 and over	45%

Essentially, non-residents in Australia pay the same tax rates but the two lowest brackets (tax-free amount and lowest rate) don’t apply.

Additionally, most residents also pay the Medicare Levy of 2%. Low earners may qualify for a reduction or an exemption, while high earners have to pay the Medicare Levy Surcharge if they don’t have private hospital insurance cover. Non-residents don’t have to pay the levy.

Medicare Levy rates for single taxpayers in 2025-26 are:

Income tax bracket	Medicare Levy Charge
Below AUD 27,222	0%
AUD 27,222 – AUD 34,027	Reduced rate below 2%
AUD 34,028 – 100,999	2%
AUD 101,000 – 118,000	3% (includes 1% surcharge on high earnings)
AUD 118,001 – 158,000	3.25% (includes 1.25 surcharge on high earnings)
AUD 158,001 and over	3.5% (includes 1.5% surcharge on high earnings)

The ATO provides an income tax calculator in Australia, as well as a Medicare Levy Calculator, for years up to 2024-25. The government’s Moneysmart website has a calculator that includes the 2025-26 year. This is for income tax but doesn’t include the Medicare Levy.

Who pays income tax in Australia?

In Australia, both residents and non-residents may need to pay income tax if they earn money during a tax year.

Who needs to file a tax return in Australia?

Most people who earned money during the tax year must file a tax return.

If you’re a tax resident in Australia, you may be exempt from filing requirements if your earnings are below the tax-free threshold (AUD 18,200 for 2025-26). However, if your income was taxed at source (e.g., from your employment salary), you may still need to lodge a short “non-lodgement” notice even if you don’t owe tax.

Non-residents and self-employed workers usually have to file full annual returns, regardless of how much they earn.

Residents in Australia pay tax on worldwide income, whereas non-residents are only taxed on Australian-source income. You’re usually considered a tax resident if you’re in Australia for 183 days or more during the tax year and have a permanent address there.

Australian income tax for foreigners

Income tax for expats works much the same way as it does for Australian nationals. If you’re an expat, you’ll be taxed according to your residency status. This means if you’re an expat living permanently in Australia and earn money abroad, you’ll be taxed on it in Australia. If you’re a non-resident earning money from an Australian source (e.g., a remote worker), you’ll pay tax on this income only.

Australia has income tax treaties with 40+ countries, including the US, the UK, and Canada. This helps to prevent double taxation on income.

If you’re an expat in Australia, you may need to:

• Transfer money to pay taxes in your home country while living in Australia
• Pay Australian tax on foreign income

Wise can help you avoid excessive currency conversion fees when making international transfers. These are done using the mid-market exchange rate with no hidden markups, which usually makes the transaction cheaper overall.

Who is exempt from Australian income tax?

You are exempt from Australian income tax if you are a non-resident whose only income is from foreign sources.

Australian residents generally don’t have to pay tax if their annual income is below the tax-free threshold (AUD 18,200 in 2025-26). Non-residents do not get this personal allowance.

The personal allowance is usually reduced pro-rata if you are an Australian resident for only part of the year, for example in the year of your arrival to or departure from the country.

How do you file your tax return in Australia?

The Australian tax year runs from 1 July to 30 June each year. Tax returns are usually due by 31 October each year.

Here is a brief explainer guide of the key elements of filing your Australian income tax return.

How to register for tax in Australia?

You need to register for a tax file number (TFN) before you can file a tax return. This is your tax ID number which the ATO uses.

The process for applying for a TFN depends on your nationality and residency status.

• Australian citizens aged 15 and above can apply online using Strong Digital ID.
• Australian tax residents can apply online, by post, or in person at a Services Australia centre, depending on which identity documents they have.
• Permanent migrants and temporary visitors with valid work visas can apply online using Individual Auto Registration (IAR).
• Non-residents living outside Australia must apply using a downloadable paper form sent by post.

Which forms do I need to fill out?

For your individual tax return in Australia, you will need to complete form NAT 2541 detailing your main forms of income along with associated deductions, losses, and offsets. You may also need to fill in form NAT 2679 if you received certain types of income, including:

• Foreign income
• Rental income
• Capital gains income

If you are self-employed, you can declare earnings on your personal income tax form if you’re a sole trader. Forms for other business structures include:

• NAT 0656 for companies
• NAT 0659 for partnerships

You can complete your tax return online if you set up a myTax account. This system takes you through the necessary sections you need to complete automatically. Alternatively, you can file through a registered agent who will complete the forms for you. If you submit paper returns, you can download forms from the ATO website.

You will need the following information or documentation to hand:

• Bank account details
• Proof of employment-related earnings (e.g., payslips, bank statements)
• Payment summaries from Centrelink (Services Australia) for benefits payments
• Receipts for expenses you want to claim as deductions
• Your spouse’s income (if applicable)
• Private health insurance information (if you have cover)

The ATO has instructions on how to complete your tax return if you decide to do it yourself.

Deductibles and tax relief

You can include various expenses as deductions on your tax return. Work-related deductions include:

• Transport and travel costs
• Equipment and office supplies
• Clothing costs, if you have to buy a uniform or protective gear
• Work from home expenses
• Education and training expenses

Other allowable deductions include:

• Gifts and donations
• Personal super fund contributions
• Income protection insurance
• Professional membership fees

You may also be able to use tax offsets to reduce your tax bill. These include:

• Low income tax offset
• Private health insurance offset
• Seniors and pensioners tax offset
• Foreign income tax offset

How do I pay my Australian income tax?

Once you’ve filed your tax return, you’ll receive a notification from the ATO informing you how much tax you owe (if any) along with the due date. You can pay in various different ways, including:

• Using the BPAY electronic bill payment system
• Through the ATO’s online services

Other methods include direct bank transfer, by phone, or by post.

You may need to pay your tax in regular prepaid instalments if you earn over a certain amount from self-employment or investment income.

If you are paying your Australian tax bill from abroad, you can use Wise to make a low-fee international money transfer. Wise uses the mid-market rate that avoids costly hidden conversion fees, saving money on international tax payments. For those with large tax bills, there are discounts on high-value transfer amounts (over GBP 20k or equivalent).

Income tax refunds

You might be eligible for a tax refund if you’ve paid more tax than you owe. This might be because, for example:

• Your tax offsets are higher than your tax bill.
• Your employer has withheld too much tax from your wages.

You can submit a refund request with the ATO through your myTax account, which you can do by setting up a myGov account and linking it to the ATO. Alternatively, you can file through a registered agent or submit a claim by post. The ATO aims to process online refund claims within 12 business days.

If you have calculated that you are due a refund on your tax return, you should file your claim at the same time as the return (by 31 October). However, there are no strict deadlines for tax refunds and the ATO will assess claims on past returns as long as they are valid.

You can appeal against an ATO decision regarding your tax return or tax calculation by raising a dispute or objection with the ATO themselves in the first instance. If the complaint remains unresolved, you can seek an external review (Tax Ombudsman, Administrative Review Tribunal, or Federal Court).

What happens if I don’t pay my income tax on time?

The ATO may charge interest and penalty fees if you don’t pay your income tax on time, fail to file your return by the deadline, or provide incorrect and misleading information on your return. These include:

• General interest charge (GIC): Payable on unpaid or underpaid tax, with rates applying daily, compounding over time, and updating quarterly.
• Shortfall interest charge: If you amend your tax return and it increases your tax bill.
• Penalties for late tax returns: Usually one penalty unit (currently AUD 330) for any late return, increasing by a further penalty unit every 28 days the return is late, up to a maximum of 5 units (larger penalties apply for those with income above AUD 1 million)
• Penalties for false or misleading statements: between 25-75% of the shortfall amount if statements lead to underpayment of tax, or between 20-60 units if there is no underpayment.

If you are unable to lodge your tax return or pay your tax bill on time, you might be able to get an extension or arrange to pay by instalments. Check the ATO website for details.

Income tax advice in Australia

The ATO has various resources that you can use when lodging tax returns and paying tax. These include:

• The Tax Help program available to anyone earning AUD 70,000 or less.
• National Tax Clinics providing free advice to those unable to get support elsewhere.

If you prefer to seek private professional advice, you can look for registered tax agents through the Tax Practitioners Board.

Understanding tax obligations can be challenging, especially if you’re self-employed or living as an expat with tax obligations in more than one country. Getting professional help can help you understand the complexities of the Australian tax system, and of cross-border tax issues, giving you peace of mind when you file your income tax return.

Useful resources

• Australian Tax Office (ATO) – national tax agency in Australia
• Tax Practitioners Board – search for tax agents on the public register
• myGov – government website with useful information on taxes for those working in Australia