Tax Updates & Information

To read about the ATO's yearly changes to the tax code, click here.

If you're having trouble making sense of the ATO requirements and regulations, here's some additional advice on the topics that most often trip up taxpayers.

Am I an Australian resident for income tax purposes?

To be considered a resident for tax purposes, you must meet the 'resides' test based on the normal dictionary definition:

' dwell permanently, or for a considerable time, to have one's settled or usual abode, to live, in or at a particular placeā€¦'

If you do not meet the 'resides' test, then you may still qualify as a resident for tax purposes if you meet at least one of the following tests.

  • 'Domicile' test: Your domicile, or permanent home, is in Australia, unless we are satisfied that your permanent place of abode is outside Australia.
  • '183 day' test: You are physically present in Australia for more than half of the income year, whether this is continuous or including breaks.
  • 'Superannuation' test: You are a current Commonwealth government employee and are either a member of the super scheme established under the Superannuation Act 1990, OR an eligible employee for the purposes of the Superannuation Act 1976. If this is the one test met, than your spouse or dependent children (under 16 years old) would also be considered Australian residents for income tax purposes.

How can I find or apply for a Tax File Number (TFN):

Your TFN is a nine-digit number to identify you to the ATO. The ATO can issue a tax file number to any taxpaying entity which is an individual, company, superannuation fund, partnership, or trust. As an individual or business in Australia, you are not required to apply for a TFN. However, without one, you will not be eligible to apply for government benefits, lodge your tax return electronically, or obtain an Australian Business Number (ABN). You may also be subject to additional tax without a TFN.

You can apply for a TFN with the ATO by phoning 13 28 61, 8AM-6PM Monday to Friday. It is free of charge. If you feel that your TFN has been lost or stolen, phone 1800 467 033, 8AM-6PM Monday to Friday.

How are superannuation contributions taxed?

There are four types of super contribution tax rates to be aware of:

  1. Before-tax contributions (concessional)
  2. After-tax contributions (non-concessional)
  3. Excess contributions tax
  4. High-income earners Division 293 tax

Super contributions made before tax are also known as concessional contributions and are taxed at 15%. These include (but are not limited to):

  • Compulsory employer contributions
  • Salary sacrifice payments
  • Certain self-employed contributions made by you
  • Notional taxes contributions if you're a member of a defined benefit fund

Super contributions made after tax are also known as non-concessional contributions and are not subject to tax. These include (but are not limited to):

  • Contributions made by you or your employer from your after-tax income
  • Spousal contributions
  • Personal contributions not claimed as tax deductions

If you exceed the before-tax contribution cap, the excess amount is included in your income tax return and taxed at your marginal tax rate. If you exceed the after-tax contribution cap, you have the option to withdraw the excess contributions and any earnings. These earnings will then be included in your income tax assessment and taxed at your marginal rate. Deciding to not withdraw the earnings will result in the excess being taxed at 47%.

The Division 293 tax is an additional tax on your super contributions if your combined income and super contributions total more than $300,000 annually. It equals out to be 15% of your taxable concessional (before-tax) contributions above the $300,000 threshold.

What is your preservation age for access to superannuation benefits?

You'll gain access to your superannuation under three different circumstances:

  1. When you turn 65 (retired or not),
  2. When you reach preservation age and retire, or
  3. Under the transition to retirement rules (set forth by the ATO), while continuing to work

Your preservation age is the age you must be to access your super once you are retired (or have begun the transition to a retirement income stream). As you'll see in the table below, your preservation age is based on your date of birth.

Date of Birth Preservation Age (years)
Before 1 July 1960 55
1 July 1960 - 30 June 1961 56
1 July 1961 - 30 June 1962 57
1 July 1962 - 30 June 1963 58
1 July 1963 - 30 June 1964 59
After 30 June 1964 60

Who qualifies as a dependent for tax purposes?

Claiming dependents on your tax return makes you eligible for certain tax benefits including offsets and deductions. Someone may be considered your dependent for tax purposes if that person is an Australian resident for tax purposes and any of the following:

  • your spouse
  • your parent or your spouse's parent
  • a child under 21 years old who is not a student
  • a student under 25 years old who is studying full time at school, college, or university
  • a child-housekeeper (your child who kept house for you full-time)
  • an invalid relative (your child or sibling) 16 years old or older

You may be required not just to have a dependent, but to maintain them as well. Maintaining a dependent involves any of the following:

  • living with your dependent in the same house
  • giving them food, clothing, or lodging
  • helping them pay for living, medical, and educational costs

How can I calculate the part-year tax-free threshold adjustment?

For Australian residents, the full tax-free threshold of $18,200 can be exempt from tax. If you were a part-year Australian tax resident for the financial year, then you would still be eligible to claim a tax-free threshold, but at a portion of the full-residency rate. You would claim an initial $13,464. The remaining difference of $4,736 will be prorated based on how many months you were considered an Australian resident for tax purposes. Use the formula below to calculate your tax-free threshold:

$13,464 + ($4,736 x number of months out of the financial year you were a resident) / 12