What Is the Tax-Free Threshold 2022?

A mortgage broker may be approached by their clients with questions regarding income tax, so having a clear understanding of the various elements of Australian taxation is essential. The tax-free threshold for 2022 in Australia is $18,200. The tax-free threshold refers to the amount of income an individual can make without being required to pay taxes on funds earned. 

The tax-free threshold indicates the amount of money an individual can earn in a year that will not be taxed. This rule remains for individuals who earn over $18,200, with funds that exceed the threshold being subjected to taxation. The tax-free threshold applies to all Australian citizens.

A client will need to check with their employer in order to successfully claim the tax-free threshold. Employers should be able to confirm their employee’s tax file number declaration and calculate the amount of taxes being withheld. An individual who has earned under or right at $18,200 in a year will still be required to lodge a tax return. 

There are certain forms of income that are not taxable in Australia, including the following examples:

• Specific pensions from the Australian government, including disability support pension
• Carer allowances and child care subsidies
• Specific lump sum payments, including payments for work-related injuries and terminal illnesses
• Specific education payments from the Australian government, including the Commonwealth secondary education assistance and allowances paid to students under 16 years of age