Foreign interference, mistrust in government and globalisation are undermining Australia, says the government department overseeing national security.
The Home Affairs Department also says fake news and the use of social media platforms to recruit wannabe terrorists were eroding Australia's social cohesion.
In a lengthy submission to a parliamentary inquiry on nationhood, the department lays out other threats facing Australia and its shared values.
These values include the rule of law, parliamentary sovereignty, separation of powers and a publicly accountable government.
It also says Australian citizenship is a common bond that unites all Australians.
"The Australian community expects that aspiring citizens demonstrate their allegiance to Australia," the submission says.
Australia's immigration system was about attracting young, skilled migrants that could contribute to the economy, the submission says.
New migrants were encouraged to be "fully integrated members" of society, while practising cultural traditions within the law, free from discrimination.
The department says the shrinking trust in government was consistent with global trends, as other nations bluntly asserted authoritarianism in place of democratic systems like Australia's.
"Within our society, some people seek to pursue their ends through non-democratic means," the submission says.
"These groups seek to divide and weaken our society by exploiting differences, promulgating violent extremism, promoting ethno-religious intolerance or facilitating foreign interference."
The department also pointed to the Christchurch terrorist attacks, carried out by an Australian, as a sign Australia wasn't immune from extremism.