Tax in Australia

Who is the tax authority in Australia?

The Australian Taxation Office (ATO) is the federal tax authority under the Treasury portfolio. It administers income tax, GST, Fringe Benefits Tax (FBT), the Superannuation Guarantee, and excise duties [1].

The Tax Practitioners Board (TPB) regulates registered tax agents and BAS agents under the Tax Agent Services Act 2009. Only TPB-registered practitioners can charge for preparing or lodging a tax return on behalf of another person.

State and territory revenue offices sit outside the ATO. They collect payroll tax, land tax, and stamp duty -- costs that add up for businesses or new arrivals dealing with property or payroll across more than one state.

What is the tax year and when are returns due?

Australia's income year runs from 1 July to 30 June -- a fiscal year, not a calendar year. The period 1 July 2026 to 30 June 2027 is the 2026-27 income year, and it is the year currently in progress.

Self-lodgers filing through myTax face a 31 October deadline following year-end [2]. Filers using a registered tax agent access an extended lodgment programme that can run as late as 15 May of the following year, provided the agent is engaged before 31 October and prior-year obligations are current.

Who counts as an Australian tax resident?

The Income Tax Assessment Act 1936 sets out four residency tests for individuals. Meeting any one test is enough to make a person a resident for the income year [3]:

• Resides test -- the primary test; residency follows from ordinary facts and circumstances (lifestyle, work, family, assets)
• Domicile test -- an Australian domicile without a permanent place of abode overseas
• 183-day test -- physical presence in Australia for more than half the income year, unless the person's usual home is overseas with no intention to take up residence
• Commonwealth superannuation test -- members of certain Commonwealth super schemes are deemed residents regardless of other facts

Residents are taxed on worldwide income; foreign residents are taxed only on Australian-source income. Citizenship and visa status are separate questions from tax residency -- an Australian citizen can be a foreign resident for tax purposes, and a temporary visa holder can be a tax resident.

How are foreign residents and visa holders (457/482/TSS) taxed?

Visa subclass does not set the tax rate. Residency status does, and residency is worked out under the four tests above, not by immigration category.

Most subclass 482 (Temporary Skill Shortage, the visa that replaced 457) holders working full-time in Australia satisfy the resides test or the 183-day test within their first months, and are taxed as residents -- worldwide income, the tax-free threshold, and the same brackets as any other resident. Holding a 457 or 482 visa does not by itself make someone a foreign resident for tax purposes; the visa controls immigration status, not the tax outcome.

Two groups do sit on separate schedules. Foreign residents -- people who fail all four residency tests -- pay tax on Australian-source income only, from the first dollar, with no tax-free threshold: 30% on the first AUD 135,000, then 37% to AUD 190,000, then 45% above that [8]. Working holiday makers on a subclass 417 or 462 visa pay a flat 15% on the first AUD 45,000 of income regardless of residency status, then the ordinary foreign-resident brackets apply above that [9]. Neither group pays the Medicare levy.

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  <text x='25' y='23' fill='#2a3a30' font-size='9' text-anchor='middle'>0%</text>
  <text x='88' y='23' fill='#ffffff' font-size='9' font-weight='700' text-anchor='middle'>15%</text>
  <text x='252' y='23' fill='#ffffff' font-size='9' font-weight='700' text-anchor='middle'>30%</text>
  <text x='455' y='23' fill='#ffffff' font-size='9' font-weight='700' text-anchor='middle'>37%</text>
  <text x='546' y='23' fill='#ffffff' font-size='8' font-weight='700' text-anchor='middle'>45%</text>
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<text x='20' y='158' fill='#2a3a30' font-size='11' font-weight='700'>Foreign resident</text>
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  <text x='189' y='23' fill='#ffffff' font-size='9' font-weight='700' text-anchor='middle'>30% from dollar one -- no tax-free threshold</text>
  <text x='455' y='23' fill='#ffffff' font-size='9' font-weight='700' text-anchor='middle'>37%</text>
  <text x='546' y='23' fill='#ffffff' font-size='8' font-weight='700' text-anchor='middle'>45%</text>
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<text x='20' y='222' fill='#2a3a30' font-size='11' font-weight='700'>Working holiday</text>
<text x='20' y='234' fill='#6b7770' font-size='9'>(417/462)</text>
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  <rect x='126' y='0' width='252' height='36' fill='#2e7d3d' rx='2'/>
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  <text x='63' y='23' fill='#ffffff' font-size='9' font-weight='700' text-anchor='middle'>15% flat to $45k</text>
  <text x='252' y='23' fill='#ffffff' font-size='9' font-weight='700' text-anchor='middle'>30%</text>
  <text x='455' y='23' fill='#ffffff' font-size='9' font-weight='700' text-anchor='middle'>37%</text>
  <text x='546' y='23' fill='#ffffff' font-size='8' font-weight='700' text-anchor='middle'>45%</text>
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<text x='350' y='272' fill='#2a3a30' font-size='10' text-anchor='middle'>None of the three groups on this chart pay the Medicare levy except residents (2%, not shown to scale)</text>
<text x='350' y='288' fill='#6b7770' font-size='9' text-anchor='middle'>Visa subclass (e.g. 457/482) does not set which row applies -- the four residency tests do</text>

A practical wrinkle for relocation cases: someone arriving mid-year on a 482 visa is typically a resident from the date they start living and working in Australia, not from 1 July. Residency, and the tax-free threshold that comes with it, can apply for only part of the year, calculated on a pro-rata basis.

What are the current resident income tax rates and levies?

Resident individual rates for 2026-27 (current year, effective 1 July 2026) [4][5]:

For 2025-26 (1 July 2025 to 30 June 2026, now closed) the same thresholds applied with the second bracket at 16% rather than 15% -- the only change between the two years [4][5].

The Medicare Levy adds 2% of taxable income for most residents above the low-income threshold [6]. The Medicare Levy Surcharge (MLS) adds a further 1.0-1.5% for higher earners without private hospital cover. For 2025-26 the MLS applied above AUD 101,000 (singles) or AUD 202,000 (families, plus AUD 1,500 for each dependent child after the first); for 2026-27 the thresholds rose to AUD 105,000 (singles) and AUD 210,000 (families) [6].

The Low Income Tax Offset (LITO) reduces tax payable by up to AUD 700 for income up to AUD 37,500, phasing out by 5 cents per dollar to AUD 45,000 and by 1.5 cents per dollar to nil at AUD 66,667 [7]. Combined with the tax-free threshold, LITO means a resident can earn roughly AUD 22,575 before any net tax is payable. LITO has not moved since the Stage 3 cuts took effect on 1 July 2024, and no change to it was announced alongside the 2026-27 rate cut.

The CGT discount remains 50% for resident individuals and trusts on assets held over 12 months.

What tax cuts take effect in 2026-27 and 2027-28?

The rate change above is the first of two legislated steps. From 1 July 2026, the second resident bracket (AUD 18,201 to 45,000) dropped from 16% to 15%. A further reduction to 14% is legislated to take effect from 1 July 2027, the 2027-28 income year [5]. Both stages were already law well before either took effect, though Parliament always retains the ability to amend future tax settings before a legislated date arrives.

These reductions apply to the resident schedule only. They do not change the foreign-resident or working-holiday-maker schedules described above, both of which are set independently of the resident tax-free threshold and second-bracket rate.

How does corporate tax work?

Australia runs a two-rate corporate system, split by company size and income composition [10].

Employers providing non-cash benefits to staff -- cars, low-interest loans, entertainment, salary-packaged items -- are separately liable for Fringe Benefits Tax (FBT). FBT runs on its own year (1 April to 31 March) and is charged at 47%, a rate set to match the top resident marginal rate plus the Medicare levy [14]. FBT sits with the employer; an employee's income tax return is not directly changed by the benefit, though it can affect other means-tested calculations.

Australia's dividend imputation system lets companies attach franking credits to dividends, reducing double taxation for resident shareholders when profits already taxed at the company level are distributed.

What about GST and other indirect taxes?

Goods and Services Tax (GST) is Australia's principal indirect tax -- a flat 10% value-added tax the ATO administers and distributes to the states [11].

Registration is mandatory once GST turnover reaches AUD 75,000 (AUD 150,000 for non-profit bodies) [11]. Overseas businesses supplying low-value imported goods or digital services to Australian consumers register through the same simplified regime once they cross the AUD 75,000 threshold -- relevant for offshore freelancers and remote-working visa holders billing Australian clients. Wine Equalisation Tax, Luxury Car Tax, and excise on alcohol, tobacco, and fuel sit alongside GST; state payroll tax rates and thresholds vary by state and territory.

How does the Superannuation Guarantee work?

Superannuation is Australia's mandatory employer-funded retirement system. Employers contribute a minimum of 12% of an employee's ordinary time earnings to a complying super fund -- the rate reached its final scheduled level on 1 July 2025, and no further increase is currently legislated [12].

Concessional (before-tax) super contributions are taxed at 15% inside the fund, well below marginal income-tax rates. The general concessional contributions cap was AUD 30,000 through 30 June 2026 and rose to AUD 32,500 from 1 July 2026 [13]. Division 293 adds an extra 15% tax on concessional contributions for anyone whose income plus contributions exceeds AUD 250,000 in a year [13]. Super is preserved until preservation age (60 for most people born after 1964); early release is restricted to specific compassionate or hardship grounds.

Temporary visa holders leaving Australia permanently can generally claim accumulated super as a Departing Australia Superannuation Payment (DASP), taxed at a separate withholding rate rather than under the ordinary income tax schedule.

When should someone talk to an Australian tax professional?

Some situations are straightforward enough for myTax. Others benefit from a second set of eyes:

• Arriving in or departing Australia mid-year, where the four residency tests need to be applied to specific facts and dates
• Holding a 482, 407, 500, or similar temporary visa alongside overseas income, property, or superannuation
• Crossing into the 37% or 45% bracket while also carrying investment or rental income
• Running a business or working as a contractor, where trust distributions, Division 7A loans, and expense apportionment attract scrutiny
• Receiving an ATO notice of assessment, audit letter, or compliance query
• Coordinating cross-border tax exposure alongside a home-country return -- see the expat and cross-border tax overview for how residency and double taxation interact more broadly

Before choosing a preparer, see how to evaluate a tax pro for questions worth asking about registration, scope, and fees. Only TPB-registered practitioners can lawfully charge to prepare or lodge a return.

The TaxPros Rated directory for Australia lists professionals who can review individual circumstances and confirm current thresholds before filing.

This page is general information. It does not constitute personal guidance for anyone's specific situation. Tax rules change -- current figures should always be checked on the ATO website (ato.gov.au) or with a TPB-registered Australian practitioner.