Who This Guide Is For
TL;DR — Most international students living in Australia for 6+ months are Australian tax residents and qualify for the $18,200 tax-free threshold. If your employer withheld PAYG tax, you're likely entitled to a refund of $1,000–$3,000 — and you can usually claim a Medicare Levy exemption that saves another $500–$1,500.
This guide is for international students on subclass 500 (student visa) or subclass 485 (Temporary Graduate visa) who need to lodge an Australian tax return for FY2025-26. We cover the residency test that determines your tax rates, the Medicare Levy exemption that most international students miss, what you can claim, and how to avoid the most common mistakes.
If you're on a different visa (working holiday 417/462, skilled work, partner), the rules differ — see our other guides.
Are You an Australian Tax Resident?
Direct answer: Most international students living in Australia for 6 months or more during a financial year are tax residents — even on a temporary visa, even if you intend to leave. The ATO uses several tests, but the simplest one (the 183-day rule) catches most students:
- If you were physically in Australia for 183 days or more in FY2025-26 (1 July 2025 – 30 June 2026), you're likely a resident
- Living in shared accommodation, having a bank account, enrolling in a degree, working part-time — all reinforce residency
Why residency matters
Tax residents get treated very differently from non-residents:
| Feature | Tax resident | Non-resident |
|---|---|---|
| Tax-free threshold | $18,200 first dollar tax-free | None — taxed from $1 |
| Tax rate on first $45,000 | 16% (after the $18,200 threshold) | 30% (Stage 3 non-resident rate) |
| Medicare Levy | 2% (but exemption available — see below) | Not applicable |
| Refund potential | Often substantial | Usually small or none |
Most international students are tax residents. If your employer set up your TFN declaration as "non-resident," they've been over-withholding tax — which means a bigger refund when you lodge.
Important: Your tax residency is independent of your visa status and your immigration residency. You can be on a temporary visa and still be a tax resident. The ATO's residency tests are about your physical presence and behaviour, not your visa.
Step 1: Get Your TFN
If you don't have a Tax File Number yet:
- Apply online at ato.gov.au under "Apply for a TFN"
- You'll need your passport, visa grant notice (or VEVO check), and an Australian address
- TFN arrives by post in 28 days
- Without a TFN, employers withhold at the highest marginal rate (~47%)
Your TFN is for life. Keep it confidential — never share by email, phone, or social media. Even if you change visas (500 → 485 → PR → citizen), your TFN stays the same.
Step 2: Set Up myGov + Link the ATO
- Sign up at my.gov.au with your email
- Link Australian Taxation Office as a service
- For first-time linking, you need 2 ATO-acceptable identity documents — usually a Medicare card (if you have one) or your passport. The ATO has a special "Linking code" path for international students who don't have Medicare or driver licence
Common Income Sources for International Students
International students typically have one or more of these:
- Casual hospitality jobs (cafes, restaurants, retail)
- Tutoring or teaching (often paid via ABN — sole trader rules)
- Internships and placements (some paid, some unpaid)
- Scholarship and stipend payments (some taxable, some not)
- Bank interest on savings accounts
- Dividends if you bought shares
Most casual roles are PAYG — tax is withheld each pay cycle. By 30 June you should have an income statement (formerly "group certificate") accessible via myGov from each employer.
Working hour rules (visa subclass 500): As of July 2023, students can work up to 48 hours per fortnight during semester and unlimited during official semester breaks. Earnings are taxable regardless of visa hour limits. Check your visa conditions for the latest rules.
Scholarships
Whether your scholarship is taxable depends on its purpose:
- Tuition fees only — usually not taxable
- Living allowance / stipend that's a condition of doing work for the institution — usually taxable
- Pure merit-based scholarship with no work obligation — usually not taxable
Check your scholarship letter or the ATO scholarship rulings. When in doubt, ask the institution's tax office.
Medicare Levy Exemption — The Big One
Most international students do not have full Medicare entitlement. Australia and your home country may not have a Reciprocal Health Care Agreement, and OSHC (Overseas Student Health Cover) is your insurance instead. This means you should be able to claim a Medicare Levy exemption when you lodge.
Why this matters
The Medicare Levy is 2% of your taxable income. On $40,000 of income, that's $800 every year — money you'd otherwise pay needlessly.
How to claim the exemption
Reciprocal Health Care Agreement countries: Citizens of Belgium, Finland, Italy, Malta, the Netherlands, Norway, Ireland, New Zealand, Slovenia, Sweden, and the UK may have partial Medicare access — check Services Australia for current eligibility, as the rules vary by country and by visa type. Citizens of China, India, Vietnam, Indonesia, the US, Japan, Korea, etc. have no agreement — these students are typically eligible for full Medicare Levy exemption.
Direct answer: If you're an international student from a non-agreement country (China, India, USA, etc.) and only have OSHC, you are very likely eligible for a 2% Medicare Levy exemption. Apply for the MES today.
Tax-Free Threshold
As an Australian tax resident, your first $18,200 of taxable income is tax-free for FY2025-26.
If you earned $25,000:
- Tax on first $18,200 = $0
- Tax on next $6,800 = $6,800 × 16% = $1,088
- Plus Medicare Levy 2% (often exempt — see above)
- Less Low Income Tax Offset (LITO, max $700)
- = $388 net tax owed
If your employer withheld $3,500 over the year, you'd get a refund of $3,112.
Pro tip: Make sure each of your employers knows you want to claim the tax-free threshold. You can only claim it with one employer at a time — usually your highest-paying job. With multiple employers, it's normal that you'll owe a small balance after lodgement, because each was assuming a $0 baseline.
Deductions International Students Can Claim
Same rules as any worker — you can claim work-related expenses if you paid them yourself, they directly relate to earning your income, and you have records.
Most relevant for students:
- Work-from-home hours (70¢/hr FY2025-26 fixed rate) if you do online tutoring or remote assignments for paid work
- Self-education — but only if it directly relates to your current paid work, not your degree (a paid hospitality worker can claim a barista course; cannot claim Bachelor of Commerce fees)
- Uniforms — branded uniforms with employer logo, occupation-specific PPE
- Tools and equipment under $300 — fully deductible the year purchased
- Professional memberships — relevant industry associations
- Tax agent fees from last year (if you used one)
You cannot claim:
- Tuition fees for your enrolled degree (Australian government considers this private expense)
- Books, laptop, stationery for your degree (same reason)
- Rent or accommodation while studying (private expense)
- OSHC premiums (private expense)
- Visa application fees (private expense)
- Travel to/from Australia or back home (private expense)
- Most living costs (food, transport, phone for personal use)
Many students try to claim laptop or textbooks "for study." The ATO disallows these because the deduction must relate to earning paid income, not pursuing a qualification. Stick to expenses directly tied to your paid job.
OSHC and Private Health Insurance Surcharge
OSHC (Overseas Student Health Cover) is not considered private hospital insurance for the Medicare Levy Surcharge (MLS) test. This is critical — many students wrongly tick "I have private hospital insurance" when entering OSHC details, which can affect their assessment.
For students with no Australian Medicare entitlement and only OSHC, the typical answers in myTax are:
- Medicare Levy exemption section: select the exemption category and provide MES details
- Private health insurance section: leave blank or skip (OSHC does not apply)
- Medicare Levy Surcharge: not applicable if you've claimed the Medicare Levy exemption
If you became a Medicare cardholder mid-year (e.g. your visa changed), you'll need to split the year — partial exemption for the OSHC period, full Medicare Levy for the post-Medicare period.
Step-by-Step: Lodging via myTax
Once your TFN, myGov, and ATO link are set up:
Before lodging, use the free FY2025-26 refund calculator to cross-check your estimate — if it roughly matches myTax, you haven't missed a major income or deduction.
For the detailed myTax click-through, see our step-by-step myTax guide.
Common Mistakes International Students Make
| Mistake | Why It's a Problem | Fix |
|---|---|---|
| Filing as "non-resident" by default | Lose the $18,200 tax-free threshold; pay 30% from $1 | Take the residency test honestly — most students with 6+ months in AU are tax residents |
| Skipping the Medicare Levy exemption | Pay 2% on income (e.g. $800 on $40k) unnecessarily | Apply for an MES and claim it in myTax |
| Treating OSHC as private hospital insurance | Confuses the surcharge calculation | Leave private health blank if you only had OSHC |
| Trying to claim degree tuition or laptop | ATO disallows — these are private expenses | Only claim costs tied to your paid work, not your studies |
| Claiming the tax-free threshold with multiple employers | Too little PAYG withheld — you'll owe at lodgement | Claim with your main employer only; second job uses the higher rate |
| Forgetting bank interest from savings | Pre-fill misses some accounts | Check every account that paid interest, even small amounts |
| Lodging right at 1 July | Pre-fill incomplete; expect amendments | Wait until mid-August at the earliest |
Special Situations
Transitioning from student (500) to graduate (485) visa during the year
Your tax position usually doesn't change. Continue claiming the Medicare Levy exemption for any period you only had OSHC.
Transitioning from 485 to permanent residency during the year
If you got Medicare during the year, your Medicare Levy exemption applies only to the OSHC-only period. The MES will reflect this. You'll pay the full 2% Levy on income earned after Medicare started.
Earning income through an ABN (sole trader)
Tutoring, freelance work, and Uber/Doordash typically pay via ABN. You're responsible for setting aside tax. Lodge as a sole trader in myTax — the system has a specific section for ABN income. Consider whether you should be GST registered (only if your turnover ≥ $75,000 — usually not).
Returning home before lodgement
You can lodge from overseas through myGov as long as you have an Australian bank account for the refund. The deadline (31 October 2026) still applies.
Records to Keep
The ATO requires you to keep records for 5 years from the date you lodged. Receipts for FY2025-26 should be kept until 31 October 2031 — even if you've left Australia by then.
Keep:
- Income statements from each employer
- Bank statements showing salary deposits
- Receipts for any deduction claimed
- Your Medicare Entitlement Statement (MES) — this is the most important one to keep
- Logbooks (if you claimed work-from-home or vehicle expenses)
Photos or scans on cloud storage are accepted by the ATO. AusTax AI automatically archives and timestamps receipts year-round, satisfying the ATO's 5-year record-keeping requirement with zero extra effort.
Quick Checklist
- TFN obtained, kept secure
- myGov account linked to ATO
- Tax residency confirmed (most likely: resident if 6+ months in AU)
- Medicare Entitlement Statement applied for and received
- Income from all employers verified in myTax pre-fill
- Bank interest and any ABN income added
- Medicare Levy exemption claimed (with MES)
- Private health insurance section skipped (if only OSHC)
- Work-related deductions identified and supported by records
- Bank account for refund is current (consider Australian account if returning home)
- Refund estimate verified using the free FY2025-26 calculator
- Lodged before 31 October 2026
Need Help With Your Tax Return?
Complex situation? a registered tax agent (see the directory) Our partner agents review every detail for accuracy and compliance.
*Disclaimer: This is general information only and does not constitute personal tax advice. Consult a registered tax agent for advice tailored to your specific situation. Always verify against the latest ATO guidelines at ato.gov.au.*
*Disclaimer: This guide provides general information for international students filing an Australian tax return. It is not personal tax advice. Tax residency and Medicare entitlement depend on individual circumstances; consult a registered tax agent for complex cases. AusTax AI is not a registered tax agent — our complete service connects you with TPB Registered Tax Agents.*