Six Australian tax facts that belong in the decision, not in the discovery afterwards

Almost everything written about Australian tax is addressed to somebody who has already arrived. These six are worth knowing while the destination is still a choice. Figures are for the Australian 2026/27 income year.

There is an odd gap in what gets written about migrating to Australia. The visa side is discussed at length while the decision is still open, and the tax side is discussed only after somebody has landed, has a job and has a problem. That is the wrong way round for at least six facts, because each of them either changes what a move is worth in cash terms or has a timing element that cannot be recovered once it has passed.

A note on scope, since it matters. We are Australian tax agents. Everything here is about Australia, and where a comparison with another destination would be useful we have not attempted one, because we are not qualified to give it. Where no year appears beside a figure, that figure is Australia’s for 2026/27, and every fact traces to the ATO, to Services Australia or to Home Affairs.

Fact one: what the scale actually costs, so a salary offer can be read properly

Somebody assessed as an Australian tax resident pays nothing across an opening $18,200, meets 15 cents per dollar from there as far as $45,000, then $4,020 plus 30 cents to $135,000, $31,020 plus 37 cents to $190,000, and $51,370 plus 45 cents beyond. A low income offset reaching $700 comes off the tax payable and expires by $66,667. Those figures exclude the Medicare levy of 2 per cent, which is a separate line.

Somebody assessed as a foreign resident for tax purposes receives no untaxed band and no offset at all, and pays 30 cents on every dollar from the first, on a table the ATO has published no further than 2025-26. On $70,000 that is $11,520 of income tax on the resident scale against $21,000 on the foreign resident one. The levy narrows it rather than widening it, because a full year foreign resident is exempt from the Medicare levy while the resident pays $1,400 of it, so the real gap on the same wage is $8,080 rather than the $9,480 the income tax lines alone suggest. That is the reason the next fact matters more than any other on this page.

Fact two: the visa does not decide which scale applies, and this is decided by behaviour

Australian income tax follows residency for tax purposes, which is a separate question from immigration status with its own statutory tests, decided on whether somebody actually lives here in a settled way. A temporary visa holder can be an Australian tax resident. Somebody granted a permanent visa who has not yet arrived is not one.

For a decision that is genuinely useful, because it means the scale is not something a visa category buys. Somebody moving with a family, a lease and a job usually becomes a resident from arrival regardless of subclass, while somebody flying in for a short assignment and keeping a home abroad may not. The one exception is a subclass 417 or 462 working holiday visa, where for most holders the working holiday maker scale applies whatever the residency answer turns out to be: 15 per cent to $45,000, then $6,750 plus 30 per cent to $135,000, on a table also published only to 2025-26. Running a realistic year through a calculator on both bases before committing is a ten minute exercise that occasionally changes a decision.

And the first year is smaller than the brochure figure. The $18,200 belongs to somebody who was an Australian resident for tax purposes across all twelve months of an income year. Where residency begins partway through, which is by definition what happens on arrival, the untaxed amount is $13,464 plus a proportion of $4,736, apportioned by the months of residency with the arrival month counted in full. The income year runs 1 July to 30 June, so an arrival in October leaves nine months and $17,016, and an arrival in April leaves three and $14,648. The instinct is that arriving late is the bad outcome, and on the absolute figure it is. But $13,464 of that threshold is not apportioned at all, so a short first year carries a disproportionately generous untaxed amount against the income actually earned inside it. On $8,000 a month, a July arrival puts $18,200 against $96,000, an October arrival $17,016 against $72,000, and an April arrival $14,648 against $24,000, and the effective rate falls at every step. There is no arrival month at which moving earlier in the Australian income year reduces the Australian tax on the same earnings. What the rule actually does is make the first partial year the cheapest one, and the thing to avoid is lodging that year on the full $18,200, which produces a bill rather than a refund.

Fact three: the temporary resident concession, which is a reason not to rush permanent residence

This is the largest item on the page for anybody with assets or income outside Australia, and it runs the opposite way to what most people assume, because it makes a temporary visa better than a permanent one in one specific and sometimes very valuable respect.

The rule. The test has three limbs plus a disqualifier. A temporary visa granted under the Migration Act; no status as an Australian resident under the social security legislation; and no spouse holding that status either. Satisfy those and most income sourced outside Australia becomes non-assessable non-exempt here instead of taxable, meaning ordinary and statutory income from a foreign source. Capital gains are dealt with separately and reach only taxable Australian property, and the 50 per cent discount is generally unavailable on assets acquired after 8 May 2012. Left out of it is pay for employment done, or services rendered, overseas across the temporary resident period, which can still be assessable here according to the circumstances and whatever a treaty provides. And one condition locks somebody out for good: having been an Australian tax resident at any point from 6 April 2006 without also being a temporary resident then. Note that a subclass 491 is a temporary visa despite being labelled provisional, as are the provisional business and investor streams.

So rent from a property back home, interest, dividends and offshore business profits generally stay outside the Australian return while somebody holds a temporary visa, and come into it once they do not. An Australian tax resident holding a permanent visa is taxed on income from everywhere, with a credit for foreign tax already paid, claimed as a foreign income tax offset with its own amendment window of four years from the date the foreign tax was paid.

And the day it ends carries the most valuable rule in the area. Somebody who ceases to be a temporary resident while remaining an Australian resident is treated as having acquired their CGT assets that are not taxable Australian property at market value on that day. Whatever gain had accumulated on an overseas portfolio or property up to that date is erased rather than deferred. The treatment stops once the person, or equally their spouse, becomes an Australian resident under the social security legislation, which a grant of permanent residence does and a grant of citizenship does too. That test also demands residing in Australia, so a permanent visa issued while somebody remains overseas does not flip it on the grant date by itself. Which means the sequence and the dates are a planning matter, and they have to be settled before the grant rather than reconstructed after it.

Two related points for anybody arriving with a business or an investment structure. Income from a business operated in Australia is Australian source and assessable here whatever the residency status, so the concession does not shelter it. And the concession reaches individuals and nobody else. Incorporate in Australia and the company is an Australian resident in its own right, assessed on worldwide income: 25 per cent as a base rate entity, which needs aggregated turnover beneath $50 million together with no more than 80 per cent of assessable income being passive, and 30 per cent where it fails that, which a vehicle built to hold investments normally will. Forming an Australian company and shifting foreign assets in therefore surrenders the concession and the market value reset together. Structure and foreign income are a single decision.

Fact four: superannuation is real money that is not spendable

Australia requires an employer to pay 12 per cent above the wage into a retirement fund in the employee’s name. Nothing comes out of the pay to fund it, and the obligation stands however short the hours, running from the eighteenth birthday, with a distinct rule covering under 18s who put in more than 30 hours in one week for the same employer. Two things shifted on 1 July 2026: arrival at the fund became due inside seven business days of each pay date in place of the quarterly cycle, and the calculation base moved onto qualifying earnings, which ordinarily excludes overtime wherever an award or agreement has pinned down ordinary hours. The fund itself then removes 15 per cent in tax on the way in, leaving a balance that rises by something like 85 cents per dollar. That is the temporary visa figure. After a permanent visa or citizenship, adjusted taxable income of $37,000 or less returns up to $500 of that contributions tax through the low income super tax offset, which is denied to anybody who held a temporary resident visa at any point in the income year, New Zealand citizens excepted.

For a decision the point is this: a stated total package that includes superannuation is not the same as a salary, because the superannuation portion cannot be spent until a condition of release is met, which for somebody staying in Australia generally means retiring after 60, or turning 65 with no other condition needed. Preservation age is 60 for anybody born from 1 July 1964, though reaching it is not itself a condition of release. Moving it offshore later runs through a departing Australia superannuation payment, which demands four things simultaneously: an expired or otherwise ceased visa, physical departure, nothing else Australian live, and the person falling into none of the three categories of Australian citizen, New Zealand citizen and Australian permanent resident. The balance also has to have been built on a temporary resident visa outside subclasses 405 and 410. Permanent residence shuts that door bar one narrow published situation, which is precisely why somebody uncertain about staying should read this paragraph now rather than in five years.

One old visa fixes the rate for life. A subclass 417 or 462 working holiday visa sitting anywhere in somebody’s Australian past, or a bridging visa the ATO counts as tied to one, with superannuation received across that stretch, fixes the departing payment at 65 per cent of the entire balance. Not the slice built then, the whole of it, sweeping in every dollar added afterwards under a skilled, sponsored or student visa. Absent any such visa the figures drop to 35 per cent against the taxed element and 45 against the untaxed. Anybody who did an Australian working holiday in their twenties and is now considering a skilled visa is inside that rule and nothing later undoes it. The full guide to claiming super after leaving covers both cases.

Fact five: health cover has two charges, and only one of them can be managed

The Medicare levy takes 2 per cent of taxable income from Australian tax residents. Beneath the low income threshold it takes nothing at all, and across the span between the lower and upper figures it climbs by degrees instead of landing whole. For 2025-26 a single person’s two figures were $28,011 and $35,013; nothing has superseded them for 2026/27 as this was written. A family threshold exists and is higher, $47,238 and $59,047 for 2025-26 plus $4,338 and $5,423 for each dependent child, but it is not a bigger number to measure your own income against: it is reached only where your own income already exceeds the single upper figure, and it is then tested on the combined taxable income of both spouses. For a two income professional couple it is therefore usually out of reach.

A temporary visa holder with no Medicare entitlement can be exempted, counted in days, though where there is a spouse who is neither exempt themselves nor liable for the levy the claim is a half exemption rather than a full one. Which route applies depends on residency: a person who was a foreign resident for the whole income year claims a full exemption on the return as exemption category 2 with nothing to apply for, while an Australian tax resident needs a Medicare Entitlement Statement from Services Australia for each year claimed, with up to eight weeks quoted for applications lodged between July and November. Entitlement to Medicare opens when a permanent residency application is filed rather than granted, and that same filing closes one of the grounds for the statement. That does not cost the earlier years and it cannot be dealt with in advance: applications open from 1 July for the year that has just closed, so the current year is not available except to somebody leaving Australia, and the form asks for the date of any permanent residence application, which is how each year is assessed on its own facts. What the filing does is make the exemption part year from that date onward. Malaysia holds no reciprocal health care agreement with Australia, so a Malaysian client on a temporary visa is generally in the ordinary exemption position. Australia does hold a tax treaty with Malaysia, which is a separate instrument and is what shapes how the two countries divide the taxing rights on the same income. Holders while holders of the subclass 491 and 494 provisional visas are Medicare entitled through a ministerial order despite those visas being temporary.

The second charge is often larger and is the one to plan for. The Medicare levy surcharge runs at 1 to 1.5 per cent on anybody Medicare entitled who holds no appropriate private hospital cover. For 2026-27 the single thresholds are $105,000, $123,000 and $164,000 and the family thresholds are $210,000, $246,000 and $328,000, the family figure lifting a further $1,500 for each dependent child after the first, and once there is a spouse or dependant it is combined income that is tested. Three things prevent it: income under the threshold, being in a Medicare levy exemption category, or the person and every dependant holding hospital cover for the whole year. Only the last is a choice, it has to be in place during the year, and nothing can be done about it at lodgment. Note that the family thresholds are considerably higher than the single ones, so a household on $150,000 combined is under the first family threshold and pays nothing, while a single person on $150,000 sits in the 1.25 per cent band and pays $1,875. Either way it belongs in a budget rather than in a surprise.

Fact six: Australia taxes people, not households

There is no joint return. Every person lodges their own, on their own income, at their own rate, which surprises anybody from a jurisdiction where a household is the filing unit. A dual income couple cannot shift income between themselves to average the rate, and two people arriving on different dates have different apportioned thresholds in the same year.

It is not entirely individual, though. The return asks for a spouse’s name, date of birth and income, because the Medicare levy thresholds and the surcharge thresholds are worked out on a family basis. A de facto partner counts, not only a married spouse. And as set out above, the temporary resident concession has a spouse limb, so a grant of permanent residence to one partner ends the concession for the other as well.

What to do in the first week, once the decision is made

Two things, and both are cheap.

Get a tax file number, issued once, free of charge, and yours for life across every subsequent visa, permanent residence and citizenship included. Previous time in Australia does not by itself mean one exists, because the number only ever comes into being on an application. The online application needs you physically in Australia already, on a work rights visa tied to the passport you flew in on, so it cannot be done from Kuala Lumpur. What the ATO commits to is that the number should be in your hands inside 28 days of a complete application landing with them, and it asks that nobody file a second application while those days run.

Then give it to the employer promptly, because a separate 28 days is the expensive one. It runs from the tax file number declaration completed when a job begins, on which a box records that a number has been applied for. Should it expire while the employer still lacks the number, an ordinary employee has 47 per cent taken where they are a resident and 45 where they are not, while a working holiday maker meets a flat 45 with no residency split at all. Nothing is lost permanently, but the excess comes back only through the annual return, and the return cannot be lodged until the income year has closed on 30 June.

After that the calendar is simple. The income year ends 30 June, employers finalise payroll reporting by 14 July for ordinary employees and the income statement in myGov reads Tax ready once they have, and unassisted lodgment is due 31 October. Sitting on a registered agent’s list buys much longer, out to 15 May in the year following the close of the income year, plus a stretch to 5 June for anybody who has paid what is owed by that point. Where an agent relationship is newly formed, or somebody is switching agents, the ATO says the client should already be listed before 31 October, and any earlier return still unlodged on 30 June cancels the extension outright. Nothing on the deductions side is filled in automatically, so the general list of work expenses an employee can claim is worth reading once. Where any of the work will be done under an ABN rather than as an employee, the rules for working with an ABN are a separate system worth understanding before agreeing to it, and note that neither the cost of the visa nor the cost of relocating to Australia is deductible: the ATO’s own word about removal and relocation expenses is never, and a relocation allowance from an employer is assessable income that must be declared.

The six, in one place

1. The resident and foreign resident scales are far apart, so read a salary offer against the right one.
2. Which scale applies follows residency for tax purposes, not the visa, and a first part year carries an apportioned threshold rather than the full $18,200.
3. A temporary visa usually keeps foreign income outside the Australian return, and the day that ends brings a market value reset that wipes the earlier gain. Sequence and dates matter.
4. Superannuation is 12 per cent on top of the wage but is locked, and an old working holiday visa taxes it at 65 per cent on the way out, permanently.
5. There are two Medicare charges. Only the surcharge can be managed, and only during the year.
6. There is no joint return, but a spouse still changes several thresholds and the foreign income concession.

None of this argues for or against Australia. It argues for having the numbers in the decision rather than in the aftermath. Anybody is welcome to write to us with a question about the Australian side of it, including small questions, at no cost and whether or not anything follows. Having a first Australian year looked at before the return goes in costs a good deal less than amending it afterwards.

Questions asked before deciding

How much income tax would I actually pay in Australia?

As a resident for tax purposes, nothing on the first $18,200, then 15 cents in the dollar to $45,000, then $4,020 plus 30 cents to $135,000, then $31,020 plus 37 cents to $190,000, then $51,370 plus 45 cents, with a low income offset up to $700 tapering out at $66,667. Those figures exclude the 2 per cent Medicare levy. As a foreign resident for tax purposes, 30 cents from the first dollar with no threshold and no offset.

Does a permanent visa give me a better tax rate than a temporary one?

Not directly, because the rate follows residency for tax purposes rather than the visa. In one respect a temporary visa is actually better: while you hold one and neither you nor your spouse is an Australian resident under the social security legislation, most income sourced outside Australia stays outside the Australian return. A permanent visa holder who is an Australian tax resident is taxed on income from everywhere.

Is there a tax reason to delay applying for permanent residence?

There can be, and it is worth advice rather than a rule of thumb. The temporary resident concession keeps most foreign income out of the Australian return, and on the day it ends your CGT assets that are not taxable Australian property are treated as reacquired at market value, which wipes the gain built up before then. The sequence and the exact dates matter, including whether the grant happens while you are still overseas.

Does the month I arrive make any difference?

A modest one, in the first year only. The untaxed threshold in the year residency begins is $13,464 plus a proportion of $4,736 apportioned by months of residency, counting the arrival month, and the income year runs 1 July to 30 June. October gives nine months and $17,016; April gives three and $14,648.

Is superannuation part of my salary?

It is paid on top of your wage by the employer, at 12 per cent, into a fund in your name, and it cannot be spent until a condition of release is met, generally retirement after 60 or turning 65. The fund takes 15 per cent tax on the way in. A quoted total package that includes superannuation is therefore not the same as a salary of that amount.

Can I take my superannuation out of Australia if I leave?

Only where the visa has ceased to be in effect, you have left, no other active Australian visa is held, and you are not an Australian citizen, New Zealand citizen or permanent resident. A grant of permanent residence closes that route apart from one narrow published case, so it is worth understanding before a grant rather than after.

I did an Australian working holiday years ago. Does it affect a skilled visa now?

Permanently, for superannuation. A 417 or 462 sitting anywhere in your record, or a bridging visa the ATO counts as tied to one, with super received across that stretch, fixes a departing payment at 65 per cent of the entire balance, sweeping in every dollar added afterwards under any other visa. Absent such a visa the figures fall to 35 per cent against the taxed element and 45 against the untaxed.

Does Malaysia have a health agreement with Australia?

No. Australia’s reciprocal health care agreements cover eleven countries and Malaysia is not among them, so a Malaysian client on a temporary visa with no Medicare entitlement is generally in the ordinary position for claiming the levy exemption. Note that subclass 491 and 494 provisional visa holders are Medicare entitled through a ministerial order despite those visas being temporary, so they owe the levy and cannot claim it.

Can my spouse and I file together to reduce our tax?

No. Australia has no joint return and income cannot be shifted between partners to average the rate. Your spouse’s details still go on the return, because the Medicare levy and Medicare levy surcharge thresholds are worked out on a family basis, and a de facto partner counts as well as a married spouse.

What should I do in my first week in Australia?

Apply for a tax file number, which cannot be done from overseas through the online route, and give it to your employer with the declaration on starting, because the employer’s 28 days runs from that declaration and once it passes without the number the withholding goes to 47 per cent for a resident employee, 45 for a foreign resident and a flat 45 on a working holiday visa. If your income will be above the Medicare levy surcharge threshold, arrange private hospital cover during the year rather than discovering the charge at lodgment.

Prepared for the clients of Living Without Borders by Working Holiday Tax, Australian tax agents, using published Australian government sources.

workingholidaytax.com.au | info@workingholidaytax.com.au | +61 424 513 998

This guide is general information about Australian tax and is not personal tax advice, and it does not address the tax law of any other country. Figures are for the Australian 2026/27 income year unless another year is stated. Individual circumstances differ and are worth confirming before making decisions.

Disclaimer
Nothing in this article constitutes tax, financial or migration advice, and no client relationship is created by reading it. Rates and thresholds change each financial year and their application depends on individual circumstances. Before acting, please consult a registered tax agent, the Australian Taxation Office (ato.gov.au), or a registered migration agent. Living Without Borders accepts no liability for decisions made on the basis of this article.