The tax-free threshold is the amount of money you can earn each year before you have to start paying income tax on it. In Australia, for example, you can usually claim the tax-free threshold on the first $18,200 of income you earn in the income year. Claiming the tax-free threshold reduces the amount of tax withheld from your income. If youre an Australian resident for tax purposes, you can choose to claim or not claim the tax-free threshold on the tax file number (TFN) declaration you give to your payer (including Centrelink) . If you choose to claim the tax-free threshold, you will not pay tax where your income is under $18,200, and your payer will withhold tax when you earn above $18,200. If you have more than one payer at the same time, generally, you only claim the tax-free threshold from one payer. Usually, you claim the tax-free threshold from the payer who pays you the highest salary or wage.