International Student Tax Return Australia (Subclass 500) — FY2025-26 Guide
Most international students on a subclass 500 visa are treated as Australian tax residents and benefit from the $18,200 tax-free threshold. This page walks through how the ATO residency tests apply to students, your applicable rates, Medicare Levy exemption rules and the work-related deductions you can claim.
If you hold a subclass 500 visa and have stayed in Australia for the duration of your course (typically more than six months in one location), the ATO will usually treat you as a resident for tax purposes. Tax residency is not the same as immigration residency — it is decided each financial year by the four ATO tests. As a tax resident you receive the $18,200 tax-free threshold, the standard resident marginal rates and access to the Low Income Tax Offset, which means most students earning casual income on weekends pay very little tax once their return is lodged.
Even though you are a tax resident, you remain a temporary visa holder, and that status changes a few important rules. Most students from countries without a Reciprocal Health Care Agreement (RHCA) with Australia are not enrolled in Medicare and qualify for a full Medicare Levy exemption when they apply for a Medicare Entitlement Statement from Services Australia. You are also not eligible for the HECS-HELP loan scheme, so any tuition you pay yourself is generally a private expense and not deductible.
Your employer must still pay the 12% Superannuation Guarantee on your wages. When you permanently leave Australia and your visa expires, you can claim that super back as a Departing Australia Superannuation Payment (DASP). DASP for non-WHM visa holders is taxed at 35% on the taxed component, which is significantly lower than the 65% rate that applies to working holiday makers, so it is important not to confuse the two regimes when you plan your departure.
Tax residency rules
The ATO applies four residency tests in order, and only one needs to be satisfied for you to be a tax resident. The Resides Test is the primary test for international students: living in shared or rented accommodation near your campus, holding a CoE for a course longer than six months and integrating into the local community is usually enough to satisfy it from the day you arrive. The Domicile Test is rarely relevant because most students retain a domicile of origin overseas. The 183-Day Test is a useful backup when the Resides Test is borderline — if you are physically in Australia for 183 days or more in the income year and your usual place of abode is here, you are a resident unless the Commissioner is satisfied otherwise. The Commonwealth Superannuation Test is generally not applicable to student visa holders. Practical implications: a student arriving in February for a four-year degree is almost always a resident from arrival; a student arriving in May for a six-month exchange may be a non-resident for that part-year. If you split your year between residency statuses (for example, arriving mid-year), you lodge as a part-year resident and the tax-free threshold is pro-rated. Keep clear records of your arrival date, course start date, lease and Medicare enrolment status, because these are the documents the ATO looks at if your residency is reviewed.
Applicable tax rates
As a resident for tax purposes you pay the standard FY2025-26 resident rates: 0% up to $18,200, 16% from $18,201 to $45,000, 30% from $45,001 to $135,000, 37% from $135,001 to $190,000 and 45% above that. The Low Income Tax Offset of up to $700 reduces tax further once your income drops below $66,667. Medicare Levy of 2% normally applies, but most students from non-RHCA countries (including China, India, Malaysia, Vietnam, Indonesia, the Philippines, Hong Kong and Thailand) qualify for a full exemption with a Medicare Entitlement Statement. The Medicare Levy Surcharge does not apply to anyone who is exempt from the levy itself. HECS-HELP repayments do not apply because subclass 500 holders are not eligible for HECS loans. On departure, your superannuation is paid as DASP and taxed at 35% on the taxed element of the taxable component.
Common deductions
- 1Course-required textbooks, equipment and uniforms where the items are mandated by the institution and not reimbursed, kept with itemised receipts.
- 2Work-related travel between two separate jobs on the same day, or from your workplace to a temporary client site, but never the home-to-work commute.
- 3Limited self-education expenses where the study directly maintains or improves the skills used in your current paid Australian employment, not your degree itself.
- 4Tools and protective gear required for casual work such as kitchen knives, non-slip shoes, hi-vis vests or safety glasses, apportioned for any private use.
- 5Phone and internet costs for the work-use portion only, supported by a four-week representative diary showing the work percentage you apply across the year.
- 6Tax agent fees paid in the previous financial year for preparing your return, fully deductible in the year the fee is paid.
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Frequently asked questions
Am I an Australian tax resident on a student visa?
In most cases yes. If your course runs longer than six months and you live in stable accommodation near your campus, the Resides Test is satisfied from the day you arrive. The 183-day test gives a clean backstop later in the year. Short exchange students who stay under six months can fall outside residency for that period. Tax residency is decided independently from your visa status and is reassessed every financial year, so always check both your physical days and your living arrangements before lodging.
Do I have to pay the Medicare Levy as an international student?
Usually no. Most students come from countries that do not have a Reciprocal Health Care Agreement with Australia, so they cannot access Medicare and qualify for the full 2% Medicare Levy exemption. To claim it you apply to Services Australia for a Medicare Entitlement Statement covering each financial year and quote the certificate number on your return. Students from RHCA countries such as the United Kingdom, Ireland, the Netherlands or New Zealand may have partial Medicare access and only a partial exemption.
Can I claim my tuition fees as a deduction?
Generally no. Tuition for the degree that brought you to Australia is a private expense and cannot be deducted, because it is what enables you to earn future income rather than your current income. The narrow exception is targeted self-education that maintains or improves the specific skills used in a job you already hold in Australia — for example, a barista taking a paid food-handling refresher course. Even then only the directly related course fees, textbooks and travel to class qualify.
What happens to my superannuation when I leave Australia?
Your employer pays 12% of your wages into a super fund regardless of your visa. When you leave Australia permanently and your subclass 500 visa is cancelled or expired, you lodge a DASP claim with the ATO and your fund. For student visa holders the taxed component is taxed at 35%, much lower than the 65% rate for working holiday makers. Apply within six months of departure for a streamlined process; after that the fund must transfer the balance to the ATO.
Do I have to lodge a tax return if my income was under $18,200?
If any tax was withheld from your pay you should still lodge to claim it back, because resident students under the threshold get a full refund of withheld tax. If no tax was withheld and you earned under $18,200 you can submit a non-lodgement advice to the ATO instead. Remember that bank interest, dividends and side-hustle income from rideshare or food delivery all count as income, so add those before deciding whether to lodge or non-lodge.
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