Tax-free threshold is a certain amount of income that is not subject to tax. This amount is set by the government and allows individuals to earn a certain amount of income without having to pay taxes. Understanding and claiming the tax-free threshold from a payer is important to ensure that you are not paying more taxes than necessary.
Understanding the Tax-Free Threshold
The tax-free threshold is a set amount of income that is exempt from taxes. This amount is determined by the government and can vary from year to year. The current tax-free threshold for individuals in Australia is $18,200. This means that if you earn up to $18,200, you are not liable to pay taxes on this income. In addition, if you are a resident for tax purposes, you can also claim an additional tax-free threshold of $1,080.
Claiming the Tax-Free Threshold from a Payer
If you are a resident for tax purposes and you would like to claim the tax-free threshold, you will need to do so from your employer or other payer. To do this, you will need to complete a Tax File Number Declaration form. This form is available from the Australian Taxation Office (ATO) website and will need to be completed and lodged with your employer or other payer.
Once the form has been completed and lodged, your employer or other payer will deduct the tax-free threshold from your wages or other payments they make to you. This means that the amount of tax you will pay will be reduced by the amount of the tax-free threshold.
Claiming the tax-free threshold from a payer is an important step to ensure that you are not paying more taxes than necessary. Understanding the tax-free threshold and completing the relevant paperwork is important to ensure that your claim is successful.