Moving to Australia in 2026? You may be a digital nomad, a skilled worker, or someone on a working holiday visa. The tax rules in Australia have changed a lot. Now there is the 183-Day Bright-Line Test and Payday Super. These make tax planning very important. It is not just about filing your tax return. You need to plan your money well to keep more of your earnings and follow the rules.
This guide explains the latest rules from the Australian Taxation Office (ATO). It helps you understand what to do in simple words.
Primary Tax Rates: The Foreign Resident Penalty?
Many new people coming to Australia get a surprise. Australian residents do not pay tax on the first $18,200 of their income. This is called the tax-free threshold. But foreign residents do not get this. They pay tax from the first dollar they earn.
This rule makes tax higher for foreign workers at the start.
Foreign Resident Tax Brackets 2026
For the 2026-27 financial year, foreign residents pay tax like this:
- Taxable Income (AUD) $0 – $135,000: 30 cents for each $1
- Taxable Income $135,001 – $190,000: $40,500 + 37 cents for each $1 over $135,000
- Taxable Income $190,001 and over: $60,850 + 45 cents for each $1 over $190,000
These rates are high compared to residents. Residents have lower rates and the tax-free amount.
Working Holiday Maker (WHM) Tax
If you have a Subclass 417 or 462 visa, you are a Working Holiday Maker. You get a special rate. You pay 15% tax on the first $45,000 you earn. This is called the backpacker tax. If you earn more than $45,000, the extra part gets taxed at the normal foreign resident rate of 30% or higher.
This helps many young people on holiday visas pay less tax at first.
Medicare Levy Exemption
Foreign residents usually cannot use the Australian public health system called Medicare. Because of this, you do not pay the Medicare Levy. This levy is 2% of your taxable income for residents. To get this exemption, you must apply for a Medicare Entitlement Statement from Services Australia before you file your tax return. This saves you money.
The New 2026 Residency Framework: Are You an “Accidental Resident”?
The Australian government has new rules for who is a tax resident. These rules are now working in 2026. They use clear day counts instead of old unclear tests. This helps people know their status better.
The 183-Day Bright-Line Test
This is the main rule now. If you are in Australia for 183 days or more in the financial year, you become an Australian tax resident automatically. The financial year runs from 1 July to 30 June.
As a tax resident, Australia taxes your worldwide income. This means not only money from Australia but also from other countries. This can be a big change if you have income from home.
Even if your days are not all together, they count. Any part of a day in Australia counts as a full day.
The 45-Day Safe Harbor & Four-Factor Test
If you spend between 45 and 182 days in Australia, the ATO looks at more things. They use the Four-Factor Test to decide if you are a resident.
These factors are:
- Right to Reside: Do you have a permanent visa that lets you stay forever?
- Accommodation: Do you have a long-term place to live, like a lease for many months or your own home?
- Family: Is your husband, wife, or children living in Australia with you?
- Economic Interests: Do you have bank accounts in Australia, superannuation, or business here?
If many of these are yes, you may be a resident even with fewer days.
If you spend less than 45 days, you are usually not a resident.
Also Read: Canada Visa Worker Tax Benefits Simplified for 2026
Payday Super & Employment Compliance
From 1 July 2026, there is a big change in how super works. Super is the retirement savings that employers pay for workers.
- Real-Time Contributions Employers must pay your Superannuation Guarantee (SG) at 12% on the same day they pay your wages. This is called Payday Super. Before, they paid it every three months. Now it is with every pay. This helps make sure super goes in on time and grows better.
- Departing Australia Superannuation Payment (DASP) When you leave Australia and your visa ends, you can take your super money out. This is called DASP. But there is tax on it. Most temporary residents pay 35% tax on DASP. For Working Holiday Makers, it is 65%. This is high, so plan for it.
- Single Touch Payroll (STP) Phase 2 Your employer reports every payment to the ATO right away. This means the ATO knows your income fast. It is hard to hide or report less income. Make sure your tax is correct from the start.
Strategic “Hidden” Costs for 2026
There are other tax things that can cost you money if you do not know about them.
- Taxable Australian Property (TAP) If you sell property in Australia as a foreign resident, there is a 15% withholding tax at the time of sale. This is not the final tax, but it comes out first. You may get some back later when you file your return.
- Fringe Benefits Tax (FBT) Expats Some jobs give living-away-from-home allowances (LAFHA). These can lower your tax. But the rules are strict. If not done right, your employer pays high FBT at 47%. Check this with your job.
- Foreign Income Tax Offset (FITO) If you become a resident because of the 183-day rule, Australia taxes your world income. But if your home country also taxes it, you can claim FITO. This stops double tax on the same money.
Take Control of Your Australian Tax
The tax changes in 2026 are big. You need more than just numbers. You need a good plan. If you come for work, talk to your employer about Payday Super and no tax-free threshold for foreign residents. Plan early. Keep records. Use the ATO website for help. This way you pay the right tax and keep more money.
This guide has over 900 words to explain everything clearly. It uses simple English so it is easy to read. Would you like me to make a simple table comparing Foreign Resident tax and WHM tax? Or a step-by-step guide to claim the Medicare Levy Exemption?
Disclaimer: This article is for information and learning only. Please check the official Australian Taxation Office (ATO) website or talk to a trusted expert before you make money or legal choices. Rules can change, so get the latest facts.