Tax Residency & Rate Tables
ALITAX · Bilal Jivraj — Registered Tax Agent 25287564. Original guidance from 10+ years of DASP and tax casework.
Your residency for tax purposes determines which rate table the ATO applies to your income — and the difference is huge. This chapter shows you all three rate schedules with worked examples, so you can see exactly what you would pay.
How the ATO decides your residency
Residency for tax purposes is not the same as your visa. The ATO looks at where you live, how long you stay, where your family and belongings are, and whether Australia is your home. Someone on a temporary visa can still be a tax resident if they live here for an extended period with continuity. We assess this for every client because getting it wrong changes your entire return.
1. Australian resident rates (2025–26)
Residents get the tax-free threshold — the first $18,200 is tax-free — then pay progressive rates above that. They also pay the 2% Medicare levy (unless exempt).
Plus 2% Medicare levy for most residents. Source: ATO.
2. Foreign resident rates (2025–26)
No tax-free threshold — taxed from the first dollar at a flat 30% up to $135,000, then higher. Foreign residents do not pay the Medicare levy.
No tax-free threshold. No Medicare levy. Source: ATO.
3. Working holiday maker rates (2025–26)
Visa subclasses 417 and 462 have their own special schedule — often called the “backpacker tax.” No tax-free threshold, and a flat 15% on the first $45,000, then ordinary rates above that. No Medicare levy (most WHMs are not entitled to Medicare).
No tax-free threshold. No Medicare levy. Source: ATO.
The NDA exception for working holiday makers
If you are a national of a non-discrimination-article (NDA) country and you are a resident for tax purposes, you may be entitled to the resident rate table instead of the WHM table — including the $18,200 tax-free threshold. On $35,000 income, that changes your tax from $5,250 (WHM) to $2,688 (resident). See the NDA Country Working Holiday chapter.
Why this all matters for your refund
Your employer withholds tax from every pay based on assumptions — but your actual tax is calculated on your return using the correct rate table. If your employer withheld at the wrong rate, or you worked only part of the year, you have likely overpaid — and that overpayment is your refund. We make sure the right rate table is applied so your refund is as large as it should be.