The tax-free threshold is an important concept in the world of taxation. It allows taxpayers to claim a certain amount of income free of taxation. It is important to understand how the tax-free threshold works and how to claim it in order to maximize your tax savings.
What Is the Tax-Free Threshold?
The tax-free threshold is the amount of income that is exempt from income tax. In 2021, the tax-free threshold in Australia is $18,200. This means that if your taxable income is less than $18,200, you will not have to pay any income tax. However, if your taxable income is more than $18,200, you will need to pay income tax on the amount that exceeds $18,200.
How Can I Claim the Tax-Free Threshold?
If you want to claim the tax-free threshold, you need to inform your payer (i.e. the person or company from whom you receive income) of your intention. The payer will then deduct the tax-free threshold from your taxable income, meaning that you will not have to pay income tax on the amount up to the threshold.
In order to inform your payer of your intention to claim the tax-free threshold, you need to fill out the Tax File Number Declaration form. This form is available from the Australian Taxation Office (ATO). Once you have filled out the form, you need to submit it to your payer.
In conclusion, the tax-free threshold is an important concept in the world of taxation. It allows taxpayers to claim a certain amount of income free of taxation. In order to claim the tax-free threshold, you need to inform your payer of your intention and submit the Tax File Number Declaration form to them. Doing so can help you to maximize your tax savings.