Understanding Tax for New Migrants in Australia

When you arrive in Australia as a new migrant, understanding your tax obligations is one of the most important financial steps you'll take. Tax for new migrants works differently depending on your visa type, how long you've been in Australia, and whether you're considered a tax resident. Many new arrivals are surprised to learn that tax residency is not the same as visa status, and getting this wrong can lead to penalties or missed refunds.

The Australian Taxation Office (ATO) collects income tax from residents and non-residents differently. If you're working in Australia, you'll need a Tax File Number (TFN) before your employer can pay you. Your tax rate depends on your income level, and as a new migrant, you may be eligible for deductions and offsets that can reduce what you owe. This guide walks you through the key rules, rates, and steps to get your tax right from day one.

Tax Residency: The First Thing You Need to Know

Tax residency in Australia is determined by the ATO, not by your visa type. Many new migrants assume that if they have a temporary visa, they're not a tax resident. This is incorrect. The ATO uses several tests to decide if you're a tax resident for tax purposes.

The main test is the Resides Test. If you live in Australia and intend to stay indefinitely, you're likely a tax resident from day one, even on a temporary visa. The ATO also considers the Domicile Test (where your permanent home is) and the 183-Day Test (if you're in Australia for 183 days or more in a financial year, you're usually a tax resident).

Here's what this means in practice:

  • Skilled migration visa holders (subclass 189, 190, 491) are almost always tax residents from arrival.
  • Working holiday visa holders may or may not be tax residents, depending on their circumstances and how long they stay.
  • International students are typically not tax residents in their first year, but can become tax residents if they stay long enough or meet other tests.
  • Temporary skilled visa holders (subclass 457, 482) are usually tax residents if they intend to stay for the duration of their visa.

If you're unsure about your tax residency status, contact the ATO directly. You can call 1300 139 391 or visit the ATO website to check. Getting this right early saves you from problems later.

Australian Income Tax Rates for 2025-26

Australia has a progressive tax system. The more you earn, the higher percentage of tax you pay. For the 2025-26 financial year (1 July 2025 to 30 June 2026), the tax rates are:

  • $0 to $18,200: No tax (tax-free threshold)
  • $18,201 to $45,000: 19% plus Medicare Levy
  • $45,001 to $120,000: 32.5% plus Medicare Levy
  • $120,001 to $180,000: 37% plus Medicare Levy
  • $180,001 and above: 45% plus Medicare Levy

On top of income tax, you'll pay the Medicare Levy at 2% of your taxable income if you're a tax resident. This funds Australia's public healthcare system. If you're a temporary visa holder without Medicare access, you may be exempt from the Medicare Levy if you have private health insurance.

Let's look at a practical example. If you earn $60,000 per year as a new migrant and you're a tax resident:

  • Tax on first $45,000: $45,000 minus $18,200 = $26,800 x 19% = $5,092
  • Tax on remaining $15,000: $15,000 x 32.5% = $4,875
  • Total income tax: $9,967
  • Medicare Levy (2% of $60,000): $1,200
  • Total tax and levy: $11,167

This means you take home roughly $48,833 from your $60,000 salary. Your employer will usually deduct tax and the Medicare Levy from your pay each week or fortnight, so you don't need to pay it all at once.

Getting Your Tax File Number and Filing Your First Return

Before you start work in Australia, you need a Tax File Number (TFN). Your employer cannot legally pay you without one. You can apply for a TFN online through the ATO website, by phone (1300 139 391), or in person at an ATO office.

To apply, you'll need:

  • Your passport or travel document
  • Your visa details
  • An Australian address
  • Your date of birth

The ATO usually issues a TFN within 7 to 10 days if you apply online. Once you have your TFN, give it to your employer immediately.

At the end of the financial year (30 June), you'll need to file a tax return if you've earned income. You can lodge your return online through myTax (the ATO's free online tool) or use a registered tax agent. Most new migrants find myTax straightforward for simple returns.

Key dates to remember:

  • Financial year runs 1 July to 30 June
  • Tax returns are due by 31 October (or 15 May if you use a tax agent)
  • The ATO typically processes returns within 2 weeks if you lodge online

Tax Deductions and Offsets You Can Claim

As a new migrant, you can claim deductions for work-related expenses. These reduce your taxable income, which means you pay less tax. Common deductions include:

  • Work-related uniforms and protective clothing (if you must wear them and wash them yourself)
  • Work-related travel (but not your commute to and from work)
  • Home office expenses if you work from home (a percentage of rent, utilities, internet)
  • Professional fees and subscriptions (union fees, professional memberships)
  • Work-related education and training
  • Tools and equipment you buy for work

You'll need to keep receipts and records to prove your deductions. The ATO can ask for evidence if you claim large amounts.

Tax offsets are different from deductions. They reduce the amount of tax you owe directly. New migrants may be eligible for:

  • Low Income Tax Offset (LITO): If you earn less than $66,667, you may get up to $705 back.
  • Medicare Levy Exemption: If you're a temporary visa holder without Medicare access and have private health insurance, you may be exempt from the Medicare Levy.
  • Foreign Tax Credit: If you've paid tax in another country on income you also declare in Australia, you may claim a credit.

Special Situations for New Migrants

Your tax situation depends on your visa type and personal circumstances.

International Students

If you're an international student, you're usually not a tax resident in your first year. However, if you work part-time (up to 20 hours per week during semester), you still need a TFN and must declare your income. You may not pay tax if your income is below the tax-free threshold ($18,200), but you should still file a return to claim any tax paid.

Working Holiday Visa Holders

Working holiday visa holders (subclass 417, 462) may or may not be tax residents. If you're in Australia for 183 days or more in a financial year, you're likely a tax resident. If you're not a tax resident, you don't get the tax-free threshold, and you pay tax on all income from day one. This is why it's critical to check your status with the ATO.

Skilled Migrants on Temporary Visas

If you're on a skilled migration visa (subclass 482, 457, or similar), you're almost certainly a tax resident. You'll pay tax at the standard rates and can claim deductions like any other resident. If you bring a spouse or dependents, they may also be tax residents and need to file their own returns.

Permanent Residents and Citizens

Once you become a permanent resident or Australian citizen, you're a tax resident. You pay tax at the standard rates and are eligible for all offsets and deductions available to Australian residents.

Common Tax Mistakes New Migrants Make

After helping many new arrivals with their tax, here are the mistakes I see most often:

  • Not checking tax residency status: Many temporary visa holders don't realise they're tax residents and miss filing deadlines or don't claim deductions they're entitled to.
  • Forgetting to declare all income: The ATO has records of what your employer reported. If you don't declare it, you'll be caught.
  • Claiming deductions without receipts: The ATO can reject deductions if you can't prove them. Keep all receipts for at least 5 years.
  • Not claiming eligible deductions: Many new migrants don't claim work-related expenses they're entitled to, which costs them money.
  • Missing the tax return deadline: If you miss the 31 October deadline, you may face penalties. File early to avoid this.
  • Not updating their address with the ATO: If the ATO can't reach you, you may miss important notices.

How to Get Help with Your Tax

If you're unsure about your tax obligations, several free and paid options are available:

  • ATO website (ato.gov.au): Free guides, fact sheets, and tools. You can also use the myTax tool to lodge your return for free.
  • ATO Phone Line: 1300 139 391: Free advice from ATO staff. Wait times can be long, so call early in the day.
  • Community Migrant Resource Centres: Many offer free tax help for new migrants. Search for one in your area.
  • Tax Agents: If your situation is complex (multiple jobs, rental income, business), a registered tax agent can help. They charge a fee (usually $200 to $500), but they can often find deductions that save you more than their fee.
  • Tax Clinics: Some community organisations run free tax clinics for low-income earners. Check with your local council or migrant services.

Useful Official Sources

Frequently Asked Questions

Do I pay tax in Australia if I'm on a temporary visa?

It depends on your tax residency status, not your visa type. Most temporary visa holders (skilled migration, working holiday) are tax residents and must pay tax. Check with the ATO to confirm your status, as it affects your tax obligations and the tax-free threshold.

What is the tax-free threshold in Australia?

For 2025-26, the tax-free threshold is $18,200 per year. If you earn less than this amount, you don't pay income tax. However, if you're a non-resident for tax purposes, you don't get this threshold and pay tax on all income.

How do I get a Tax File Number as a new migrant?

You can apply online at ato.gov.au, by phone (1300 139 391), or in person at an ATO office. You'll need your passport, visa details, Australian address, and date of birth. The ATO usually issues a TFN within 7 to 10 days.

When do I need to file my first tax return in Australia?

You must file a tax return by 31 October after the financial year ends (30 June). If you use a tax agent, the deadline is 15 May. You can lodge online for free using myTax or hire a registered tax agent.

Can I claim work-related deductions on my tax return?

Yes, you can claim deductions for work-related expenses like uniforms, travel, home office costs, and professional fees. You must keep receipts and records to prove your claims, and the expense must be directly related to earning your income.

What is the Medicare Levy and do I have to pay it?

The Medicare Levy is 2% of your taxable income and funds Australia's public healthcare. Tax residents must pay it unless they're exempt. Temporary visa holders without Medicare access may be exempt if they have private health insurance.

Will I get a tax refund as a new migrant?

You may get a refund if your employer deducted more tax than you owe, or if you claim eligible deductions or offsets. File your tax return to find out. The ATO typically processes refunds within 2 weeks of lodging online.

What happens if I don't file my tax return on time?

If you miss the deadline, you may face penalties and interest charges. The ATO can also pursue you for unpaid tax. File as soon as possible after 1 July to avoid delays and penalties.

This is general information only. It is not legal, migration, financial, tax, medical, or professional advice. Always check official sources before acting.