The Ultimate Guide to Australian Taxation

Australia has one of the most complex tax systems in the world. The Australian Taxation system is so extensive and detailed that the average person will find it almost impossible to understand. Thankfully, there are accountants and legal professionals who specialize in helping people file taxes each year. Australian taxation can be confusing for individuals who are new to the country and its laws, especially when it comes to working out which Tax File Number you need, what deductions you're eligible for, and how much you'll have to pay when everything is said and done. This guide aims to answer all of your questions about Australian tax laws, including general information as well as specific details regarding different tax codes. If you plan on moving to or staying in Australia permanently (on a visa of any kind), investing in property or other assets, or receiving any type of ongoing income stream - such as a pension - this information will be essential for your future financial stability.

Who is Responsible for Paying Taxes in Australia?

Whether you're a citizen or a permanent resident, the responsibility to pay income tax lies with you. You're expected to file your taxes annually, regardless of whether or not you have earned any income, as the tax code is a progressive system. There are, however, deductions and tax credits that you can claim to reduce the amount of tax you have to pay, regardless of whether or not you have received any income during the year. If you earn a certain amount of money in Australia, you will be required to pay taxes on that income. The only exception to this rule is for people who are studying at a recognised institution, who are therefore exempt from paying income tax on money earned during that period. Income is defined as any cash you earn from a source outside of your employment, including from investments or self-employment.

Which Tax File Number Do I Need?

If you're an Australian citizen, you will already be familiar with your tax file number (TFN). If you are a permanent resident, however, you'll need to apply for a TFN so that you can file taxes during the year. Depending on your circumstances, you'll have to apply for either a TFN-A, TFN-B, or TFN-O. TFN-A is for Australian citizens who are on a current visa, while TFN-B is for permanent residents. If you are studying in Australia and do not earn enough to file tax returns, you'll be able to apply for a TFN-O. If you have applied for a TFN-A in previous years and have now been given a TFN-B, don't worry - your tax records will be transferred over to the new number.

What Deductions are Eligible?

Deductions are items that can be used to reduce your taxable income. For example, if you spent a certain amount of money on work-related tools or professional clothing, you can deduct that amount from your taxable income to reduce the amount of taxes you're required to pay. For Australian residents, there are three types of deductions that you can claim: work-related tools, self-education expenses, and the dependent spouse. For the majority of deductions, you'll need to keep detailed records, including receipts of any purchases in order to use them as deductions. If you have a spouse who is not working and is therefore not required to pay taxes on their income, you're able to claim them as a dependent and reduce your taxable income by that amount.

How Much Will I Pay in Tax?

The amount you're required to pay in taxes each year depends on a number of factors, including your occupation, income, and deductions. To find out how much you'll have to pay in taxes, you'll need to complete a tax return. A tax return is a financial document that calculates how much tax you're required to pay based on your income and deductions. To help you complete your tax return, the Australian Taxation Office provides a series of online guides, and questionnaires that help you determine exactly how much you'll need to pay in taxes. You can also use the taxily calculator to help you with your tax.


Now that you know everything you need to about Australian taxation, you'll be prepared to file your taxes next year and be in good shape for whatever comes next. It's important to note that taxation laws change frequently and are often amended, so be sure to stay up to date with the ever-changing landscape if you want to avoid any financial mishaps in the future.