Navigating the Australian tax system can be a bit overwhelming, especially when you are balancing a regular job and freelance or gig work.

The short answer is that the Australian Taxation Office (ATO) does not separate your TFN and ABN income into different brackets—they are combined.

Here is the exact breakdown of how your combined income is taxed.

Many international students work a standard employment job using a Tax File Number (TFN) and do independent contracting or gig work (like Uber, food delivery, or freelancing) using an Australian Business Number (ABN).

When it comes to tax time, the ATO treats you as a individual sole trader for your ABN work. This means your TFN earnings and your ABN earnings are added together to form your total taxable income.

1. Determining Your Residency Status

If your course is 6 months or longer, the ATO generally considers you an Australian resident for tax purposes. This is great news because it means you get access to the same lower tax brackets and thresholds as regular citizens, rather than the higher foreign resident rates.

2. The Current Income Tax Brackets (2025–2026)

Your combined taxable income (TFN + ABN minus eligible business deductions) is taxed according to these resident marginal brackets:

Note: For the upcoming 2026–2027 tax year starting 1 July 2026, the 16% bracket is legislated to drop slightly to 15%, providing a bit more cost-of-living relief.

The Crucial Difference in How Tax is Paid

While the rate is the same, the way the tax is collected from TFN and ABN income differs completely. This is where many students get caught out at the end of the financial year.

1.TFN Tax Withholding: Automatic.

Your TFN employer automatically takes tax out of your paycheck before it hits your bank account (PAYG withholding). You don’t have to save for this tax yourself.

2.ABN Gross Payments: Manual Tracking.

Your ABN clients or platforms pay you the full amount without withholding any tax. You receive 100% of the money up front.

3.Setting Money Aside: Crucial Step.

Because no tax was taken from your ABN earnings, you must set aside roughly 16% to 30% of your ABN income in a separate savings account to cover your tax bill later.

4.The Combined Lodgement: End of Financial Year.

When you lodge your tax return after June 30, the ATO calculates the total tax owed on your combined income. They subtract the tax your TFN employer already paid, and you must pay the remaining balance (which comes from your ABN earnings).

Lowering Your Taxable Income with Deductions

Because you are running a business under your ABN, you can claim work-related expenses to lower your taxable income. For example, if you do food delivery, you can claim a percentage of your phone bill, bicycle or vehicle expenses, and safety gear.

The ATO looks at the final calculation:

$$\text{Total Taxable Income} = (\text{Gross TFN Income}) + (\text{Gross ABN Income} – \text{Allowable ABN Deductions})$$

Keep strict records and logbooks throughout the year, as the ATO requires proof of expenses if you want to claim deductions safely.