The Young Australian's Guide to Tax & the ATO

Australia uses a PAYG withholding system — Pay As You Go. When you're employed, your employer deducts tax from every pay and sends it directly to the ATO on your behalf. By the time you lodge your tax return, most of what you owe has already been paid. The return is largely a reconciliation: did your employer withhold too much (refund) or too little (bill)?

Tax in Australia is progressive, meaning the more you earn, the higher the rate you pay — but only on the income above each threshold. People often misunderstand this. If you earn $50,000 and move into a higher tax bracket, only the dollars above the threshold are taxed at the higher rate. Your entire income doesn't suddenly get taxed more.

The 2024–25 tax brackets for Australian residents:

• $0 – $18,200: Tax free (the tax-free threshold)
• $18,201 – $45,000: 19 cents for each $1 over $18,200
• $45,001 – $120,000: $5,092 plus 32.5 cents for each $1 over $45,000
• $120,001 – $180,000: $29,467 plus 37 cents for each $1 over $120,000
• $180,001+: $51,667 plus 45 cents for each $1 over $180,000

On top of income tax, most Australians pay the Medicare levy — an additional 2% of taxable income that funds the public health system. This is separate to the Medicare Levy Surcharge, which only applies to higher earners without private hospital cover.

The tax year in Australia runs from 1 July to 30 June. You can lodge your return from 1 July, and the standard deadline if you're lodging yourself is 31 October. If you use a registered tax agent, you typically get until May the following year — but you need to be on their books before 31 October.

Most Australians lodge via myTax, the ATO's free online tool accessible through myGov. It's straightforward: the ATO pre-fills much of your return automatically using data from your employer, your bank, your super fund and government agencies. You review it, add anything that's missing (deductions, other income), and submit.

What you'll need to lodge:

• Your income statement — previously called a payment summary or group certificate. Your employer submits this to the ATO directly. It should be available in myTax by late July. Don't lodge before it appears or you may need to amend later.
• Bank interest — the ATO often pre-fills this, but check it's accurate against your actual bank statements.
• Any deduction records — receipts, logs, invoices for any work-related expenses you're claiming. You don't submit these with your return, but you must keep them for five years in case of an audit.
• Private health insurance details — if you have hospital cover, you'll need your annual statement from your insurer.