Updated October 2026 for the 2026–27 Australian financial year (1 July 2026 to 30 June 2027). This is general information, not personal advice; confirm current rules with the ATO or your adviser before acting.
Australia’s income tax system is administered by the ATO under the Income Tax Assessment Acts of 1936 and 1997. Residents are taxed on worldwide income; foreign residents are generally taxed only on Australian-sourced income. Getting residency status right is the most important first step.
The four residency tests
- Resides test: do you actually reside in Australia? This is the primary test.
- Domicile test: your domicile is Australia unless the Commissioner is satisfied you have a permanent place of abode overseas.
- 183-day test: present in Australia for more than half the income year, unless your usual place of abode is overseas and you do not intend to live here.
- Commonwealth superannuation test: applies mainly to Australian government employees working overseas.
India–Australia DTAA: Australia has a Double Taxation Agreement with India. Indian residents with Australian-source income, and Australian residents with Indian income, should review the agreement to avoid being taxed twice.
Individual tax rates 2026–27 (residents)
| Taxable income | Tax rate |
|---|---|
| $0 – $18,200 | Nil (tax-free threshold) |
| $18,201 – $45,000 | 15% |
| $45,001 – $135,000 | 30% |
| $135,001 – $190,000 | 37% |
| Over $190,000 | 45% |
From 1 July 2026 the lowest rate fell from 16% to 15%, and it is legislated to fall to 14% from 1 July 2027. Most residents also pay the 2% Medicare levy.
Business tax rates
| Entity | Rate | Notes |
|---|---|---|
| Company (base rate entity) | 25% | Aggregated turnover under $50 million and no more than 80% passive income |
| Company (other) | 30% | All other companies |
| Trust income | Beneficiaries’ rates | Taxed in the hands of beneficiaries, generally |
| Sole trader | Individual rates | Business income added to personal income |
Key deductions
- Work-related expenses such as tools, protective clothing and home-office running costs
- Investment expenses such as interest on investment loans and rental property costs
- Self-education costs related to your current employment
- Gifts of $2 or more to deductible gift recipients (DGRs)
- Income protection insurance premiums held outside super
Capital gains tax
- 50% CGT discount for resident individuals and trusts on assets held for more than 12 months
- No discount for companies: the full gain is taxed at 25% or 30%
- Main residence exemption: gains on your home are generally exempt, with special rules for foreign residents
- Cryptocurrency: the ATO treats most crypto as a CGT asset, so disposals are CGT events
GST
Businesses with GST turnover of $75,000 or more ($150,000 for non-profits) must register for GST, charged at 10%. Activity statements (BAS) are lodged monthly, quarterly or annually.
What changed for businesses from 1 July 2026
- Payday super: employers must now pay employees’ superannuation at the same time as wages, instead of quarterly.
- Superannuation guarantee remains at 12% of ordinary time earnings.
- Instant asset write-off: the $20,000 threshold for small businesses is now permanent.
- The Small Business Superannuation Clearing House closed on 1 July 2026.
Need Australian tax support?
Panacea WFS assists businesses, accounting practices and NRI clients with Australian bookkeeping, BAS workpapers and tax compliance.