What Is A Tax-Free Threshold

The Tax-Free Threshold is a certain amount of money that you can earn each year without having to pay income tax. The current Tax-Free Threshold is $18,200. This means that if you earn less than $18,200 in a financial year, you will not have to pay any income tax.

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If you earn more than the Tax-Free Threshold, you will have to pay income tax on the amount above the threshold. For example, if you earn $20,000 in a financial year, you will only have to pay income tax on $1,800 (which is $20,000 – $18,200). The amount of tax you pay will depend on your income tax bracket.

The Tax-Free Threshold is not a separate tax rate – it is simply the amount of money you can earn before you start paying income tax. The Tax-Free Threshold is available to all taxpayers, regardless of their income level or how much they earn.

If you are a low-income earner, you may be eligible for the Low Income Tax Offset (LITO). The LITO is a rebate that can reduce the amount of income tax you have to pay.

For example, if you earn $20,000 in a financial year and you are eligible for the LITO, your income tax bill will be reduced by $445. This means that you will only have to pay income tax on $1,555 (which is $20,000 – $18,200 – $445).

The Tax-Free Threshold and the Low Income Tax Offset can help to make sure that low-income earners are not paying too much income tax.

How Do I Claim The Tax-Free Threshold?

You can claim the tax-free threshold if you are an Australian resident for tax purposes and you:

– have never claimed the tax-free threshold before;

– are not currently claiming the tax-free threshold; or

– are claiming the tax-free threshold for the first time after previously earning a salary or wage.

If you are not eligible to claim the tax-free threshold, you may still be able to reduce the amount of income tax that you have to pay by claiming other deductions and offsets.

If you are an employee, you can claim the tax-free threshold from your employer when you start a new job. If you don’t claim the tax-free threshold, your employer will deduct tax from your pay at a higher rate.

This means that you will end up paying more tax than you need to. Therefore, it is always beneficial to claim the tax-free threshold if you are entitled to it.

You can also claim the tax-free threshold if you change jobs during the year and haven’t already claimed it from your previous employer.

You can only claim the tax-free threshold from one job. If you have more than one job and your combined income is more than $18,200, you can ask your employer to withhold tax from your pay at a higher rate. This will ensure that you don’t pay too much tax during the year.

If you are a pensioner or benefit recipient, you can claim the tax-free threshold by completing a Tax file number declaration form and giving it to your payer. You can get a copy of this form from the ATO website or by calling 13 28 61.

To claim the tax-free threshold, you need to complete a Tax file number declaration form and give it to your employer. You can get a copy of this form from the Australian Taxation Office (ATO) website or by calling 13 28 61.

If you have any further questions about the Tax-Free Threshold or the Low Income Tax Offset, you should speak to a qualified tax accountant or financial advisor or the ATO.

If you want to read additional blogs about tax-free thresholds click on related articles such as what is the tax-free threshold for 2019