Welcome to your new life in Australia and congratulations on receiving your first paycheck!
It’s an exciting milestone, but if you’re new to the country, those deductions on your payslip can feel confusing. The Australian tax system for new migrants can be quite different from what you are used to.That’s why we created this guide to help you make sense of how tax works here, from TFNs and income brackets to superannuation and Centrelink updates. At OzMoneyTalks, we arre here to support migrants like you on your journey to financial confidence in Australia.
1. Financial Year in Australia: July to June
The first thing to know is that the Australian tax system is based on a financial year, not a calendar year. Australia’s tax year runs from 1 July to 30 June. All tax returns, income reporting, and financial planning align with this timeframe. When you file your taxes or report income, it always aligns with this timeline.
Knowing this helps you plan your income, deductions, and refunds more effectively especially when adjusting estimates for benefits like Centrelink payments.
2. Key Things Migrants Often Miss About the Australian Tax System
If you’ve recently moved to Australia, understanding how taxes work can be a learning curve. Here are a few things that often surprise new migrants:
- Income tax is deducted automatically from every paycheck via PAYG (Pay-As-You-Go).
- Superannuation is mandatory and paid by your employer but not accessible until retirement or permanent departure.
- A Tax File Number (TFN) is essential for working legally and filing tax returns.
- Government support (like Centrelink benefits) is tied to accurate income reporting.
Getting familiar with these basics early on helps you avoid mistakes and makes tax time much less stressful.
Shradda, a 28-year-old digital marketing executive from Mumbai, got her first paycheck in Melbourne and was surprised to see over $600 in deductions. Like many migrants, she didn’t know what “super” or “PAYG” meant at first.
3. Why You Must Apply for a TFN (Tax File Number)
A Tax File Number (TFN) is your personal reference number for the Australian tax system. You can apply for a TFN online for free through the Australian Taxation Office ATO website
Why it matters:
- Without a TFN, your employer may tax you at the maximum rate (up to 45%)
- You can’t lodge a tax return or apply for government benefits without one.
- It’s free to apply, and takes just a few minutes online.
4. Understanding Australian Income Tax Rates (Slabs)
Australia uses a progressive income tax system, where your tax rate increases as your income does. Your employer deducts this automatically under PAYG (Pay-As-You-Go) withholding.
Australian resident income tax rates for the 2024 – 25 financial year (1 July 2024 – 30 June 2025)
| Taxable Income | Tax on This Income |
|---|---|
| $0 – $18,200 | Nil |
| $18,201 – $45,000 | 16c for each $1 over $18,200 |
| $45,001 – $135,000 | $4,288 + 30c for each $1 over $45,000 |
| $135,001 – $190,000 | $31,288 + 37c for each $1 over $135,000 |
| $190,001 and above | $51,638 + 45c for each $1 over $190,000 |
Income Tax Slabs for FY 2023–24 and FY 2022–23:
| Taxable Income | Tax Payable |
|---|---|
| $0 – $18,200 | Nil (Tax-free threshold) |
| $18,201 – $45,000 | 19c for each $1 over $18,200 |
| $45,001 – $120,000 | $5,092 + 32.5c for each $1 over $45,000 |
| $120,001 – $180,000 | $29,467 + 37c for each $1 over $120,000 |
| $180,001 and above | $51,667 + 45c for each $1 over $180,000 |
Use the ATO tax calculator to estimate how much tax you owe.
5. Decoding Your Payslip and Superannuation Contributions
Alongside your take-home salary, your payslip will show employer contributions to superannuation (Australia’s retirement fund system).
Superannuation (or “super”) is Australia’s retirement savings system:
- Your employer must contribute 11% of your ordinary time earnings into a nominated super fund.
- Super contributions are taxed at a concessional rate of 15%, usually lower than your income tax.
- You can choose your own fund or go with your employer’s default one.
- You generally can’t access super until retirement or if you’re a temporary resident permanently leaving Australia.
Checking your super regularly helps you make sure it’s being paid correctly.
6. Update Your Income with Centrelink (if Applicable)
Even if you’re not using Centrelink services now, it’s wise to create a myGov account and link it to Centrelink. This becomes especially useful if you or your family qualify for benefits like:
- Childcare subsidy
- Family Tax Benefit
- Rent assistance
- Health Care Card eligibility
By updating your income accurately and regularly, you can:
- Avoid overpayments or underpayments
- Receive eligible support immediately
- Prevent surprises at tax time when reconciliations are done
7. How Business Income Is Taxed Differently
If you are planning to freelance, consult, or run your own business alongside a job, you will need an Australian Business Number (ABN). Business income is not taxed like salary, you will need to:
- Set aside money to pay tax manually
- Lodge Business Activity Statements (BAS) quarterly if you earn over $75,000 and are registered for GST
- Manage your expenses and track deductions
Important : ATO treats your business as a separate source of income, so it’s your responsibility to declare and report it correctly.
8. Consult a Tax Advisor (Especially in Your First Year)
Doing taxes in a new country can be intimidating. That’s why consulting a registered tax agent or accountant can be worth every dollar. Here’s why:
- Their fees are tax-deductible
- They help you claim deductions like work from home costs, car expenses, uniforms, etc.
- They can help with income splitting, investment tax advice, and capital gains planning
Most individuals use a tax agent during July–October when the tax return window opens. You will also get an extended deadline if you lodge through a registered agent.
9. Always Cross-Check with Official Sources
While community forums or Facebook groups can be helpful, always refer to official government websites for accurate tax information.
- ATO.gov.au – Everything from tax rates to superannuation
- Fair Work Ombudsman – For understanding salary, leave, and entitlements
- Services Australia – For Centrelink payments and family benefits
Avoid relying solely on social media or hearsay. A simple mistake can cost you at tax time.
Conclusion: Taking Control of Your Taxes in Australia
Your first paycheck in Australia is more than just a payment. It’s the beginning of your financial journey in a new country.
By understanding the Australian tax system for new migrants, you will be better equipped to manage your money, access the right support, and make smart decisions as you settle into life down under.
Bookmark this guide and come back to it during tax season. It’s your go-to resource from OzMoneyTalks, where we help migrants grow, save, and succeed financially in Australia.
