Income from more than one job?

David Andreoli

David Andreoli

Balanced Bookkeeping & Tax

The tax-free threshold is the amount that the Government has declared to be tax free for each resident taxpayer.  Generally everyone will claim the tax-free threshold, but if you have multiple employers you usually only claim the tax-free threshold from one. Claiming the tax-free threshold reduces the amount of tax withheld from your income and can impact your return at tax time.

Currently the tax-free threshold is $18,200. This means if you’re an Australian resident for tax purposes, the first $18,200 of your income in each income year is tax-free. You can choose to claim the tax-free threshold, which will be taken into account when you are taxed by your employer each payrun.  This is straight forward when you only have one employer.

If you have more than one employer at the same time, it is important to only claim the tax-free threshold from one of them – usually from the payer who pays the highest salary or wage.  Your other employers then withhold tax from your income at a higher rate.  If you claim the tax-free threshold from multiple employers at the same time, you will end up paying too little tax.  As a result, you will most likely receive a tax bill when you process your year-end tax return.

Sometimes the total tax withheld from all sources may be more or less than the amount you need to meet your end-of-year tax liability.  These tax withheld amounts are credited to you when you lodge your income tax return and, if too much tax was withheld, it may result in a tax refund.  However, if not enough tax was withheld, you may need to pay the difference to the ATO so that you have paid enough tax for your income.

Whether too much or not enough tax is withheld during the year – it all sorts itself out through your tax return.  If too much tax was taken during the year – your net pay each payrun will be less but you will get a better result when you process your year-end tax return.  If not enough tax was taken during the year – your net pay each payrun will be higher but you will get a worse result in your tax return at year-end.

If you’d like to chat about your individual or business tax and/or accounting needs, get in contact with us by hitting the button below.

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