Australia Tax Return 2025 — Complete Guide for Employees
Australia · February 15, 2026 · 9 min read
Every Australian employee needs to lodge a tax return after 30 June. For most salaried workers, this is a straightforward process — and many receive a refund because their employer's PAYG withholding slightly exceeded their actual tax liability during the year. The ATO paid out over $25 billion in tax refunds in FY2024, with the average refund around $2,800.
This guide covers everything you need to know: key dates, what to claim, how PAYG works, HELP debt repayment, work-from-home deductions, and tips to maximise your refund legally.
Key dates for FY2025 tax return (year ending 30 June 2025)
The tax year in Australia runs from 1 July to 30 June. For FY2024-25 (ending 30 June 2025):
31 October 2025: Deadline for individuals lodging directly via myTax or paper return. This is the most important date for most employees.
15 May 2026: Extended deadline if you use a registered tax agent. Note: if you owe tax, it may still be due earlier — check with your agent.
From 1 July 2025: Most refund-eligible returns lodged via myTax are processed within 2 weeks, sometimes faster. The ATO begins accepting lodgements from 1 July but pre-fill data from employers, banks and government agencies is usually available by mid-July.
Understanding PAYG withholding
PAYG (Pay As You Go) withholding is Australia's system for collecting income tax throughout the year. Your employer withholds estimated tax from each pay period based on your Tax File Number (TFN) declaration and assumed annual income.
The year-end tax return reconciles your actual tax liability against what was withheld. If your employer withheld too much (common if you started work mid-year, had periods of leave, or claimed deductions), you receive a refund. If too little was withheld, you pay the difference.
What can you claim as work-related deductions?
Work-from-home expenses: The ATO offers two methods. The revised fixed rate method (67 cents per hour) covers electricity, internet, phone and stationery — but requires you to keep a diary of hours worked from home. The actual cost method lets you claim the precise work proportion of actual expenses, which can be higher for those with home offices but requires more documentation.
Tools and equipment: Items costing $300 or less can be immediately deducted. Items over $300 must be depreciated over their effective life. A laptop used 80% for work can be deducted at 80% of its cost, spread over the ATO's approved effective life (typically 3–4 years for laptops).
Vehicle expenses: For work-related travel (not commuting). The cents-per-kilometre method allows 88 cents per km (FY2024-25) for up to 5,000 km per year. The logbook method requires keeping a 12-week logbook and can yield higher deductions for high-km work drivers.
Self-education: Courses, seminars, textbooks and student fees are deductible if the education directly relates to your current job — not a future role or career change. A nurse upskilling in ICU procedures can claim; a nurse doing a law degree cannot.
Uniforms and protective clothing: Clothing with a distinctive logo or protective clothing required for work (safety boots, hi-vis, hard hats) is deductible, including laundry costs. Generic clothing — even if only worn to work — is not deductible.
Union fees and professional memberships: Fully deductible if they relate to your current employment. This includes professional association memberships (CPA, Law Society, AMA, Engineers Australia etc.).
The Medicare Levy and Levy Surcharge
The Medicare Levy is 2% of taxable income. Low-income earners below $26,000 (singles, FY2024-25) pay a reduced levy or none at all. Families with two or more children have a higher threshold.
The Medicare Levy Surcharge (MLS) is an additional 1–1.5% charged to higher earners who do not hold private hospital cover. Thresholds for FY2024-25: singles over $93,000 pay 1% MLS; over $108,001, 1.25%; over $144,001, 1.5%. Taking out basic hospital cover (as cheap as $35–50/month) eliminates the MLS entirely for most people in the lower MLS bracket.
HELP debt repayment — what you need to know
HELP (Higher Education Loan Program, formerly HECS) debt is repaid automatically through the tax system once your income exceeds $54,435 (FY2024-25). Repayment rates range from 1% at $54,436 up to 10% at $159,664+.
On a $70,000 income, HELP repayment rate is 2.5% = $1,750/year (approximately $146/month). Your employer should withhold for HELP if you have indicated a HELP debt on your TFN declaration.
HELP debt is indexed annually to CPI — in recent years this has been 3.9–7.1%, meaning the debt can grow if your repayments do not exceed the indexation. From 2025, the government caps HELP indexation at the lower of CPI or Wage Price Index, which protects borrowers during high-inflation periods.
Superannuation: what employees need to know at tax time
Your employer's Superannuation Guarantee (SG) contributions are paid on top of your salary and are not taxed as income. Employer SG contributions are taxed at 15% within the super fund — significantly lower than most employees' marginal income tax rates.
Voluntary salary sacrifice contributions to super are also taxed at 15% within the fund rather than your marginal rate. On a $90,000 salary (marginal rate 32.5%), sacrificing an additional $5,000 to super saves you 17.5 cents per dollar in tax (32.5% − 15%) = $875 in tax savings while adding $5,000 to your retirement savings.
The concessional (pre-tax) contribution cap for FY2024-25 is $30,000, including employer SG contributions.
Common mistakes that delay your tax refund
Not having a TFN: Without a Tax File Number, your employer must withhold at the top rate of 47%. Apply for a TFN at the ATO website before starting work.
Not claiming the tax-free threshold: You can only claim the tax-free threshold at one employer. If you switch jobs mid-year, ensure you claim it at your primary employer.
Forgetting bank interest: The ATO pre-fills most income information, including bank interest. Do not omit it — the ATO data-matches with financial institutions.
Overclaiming deductions: The ATO uses data analytics to flag unusual deductions. Keep all receipts for at least 5 years and only claim amounts you can substantiate.
Use our Australian salary calculator
Want to see exactly how much tax you should be paying — and check whether your PAYG withholding looks right? Use our Australia salary calculator to see your estimated income tax, Medicare Levy, and take-home pay for FY2024-25, with LITO included in the calculation.