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Tax on a second job

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I already have a full time job, but I got the opportunity to work part-time in my dream job (graphic design) on weekends and in the evenings after hours. This is excellent because it gives the opportunity to make some contacts and build my rep, and my new boss is awesome. The only problem is that when I opened my payslip, I didn’t get anywhere near what I expected to get paid. For example, last week I worked 16 hours at $33.46 an hour. According to my calculator $33.46 x 16 = $535.36. When I plug this into the tax withheld calculator on ato.gov.au, I should be taxed $45, giving me $490.36 as take-home pay. My payslip confirms that my gross pay was $535.36 (awesome, I know how to multiply two numbers Smiley Wink ). The problem is that the boss withheld $143.00 in tax! That means that my net pay was $392.36 - almost a $100 difference!

 

I love the job, but I don’t want to get ripped off (even if the experience is great). I asked the pay office what happened with my pay, and they just told me to check the calculator on ato.gov (which I did). What should I do?

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Most helpful response

ATO Certified Response

Enthusiast

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Hi Petey, 

 

The difference in your results of $45 and $143 comes from whether you would like to claim the Tax Free Threshold on your second job. 

 

Have a look at the tool "Tax Withheld Calculator". 

At the question "Has the payee claimed the Tax Free Threshold?" choosing Yes will result in $45 being withheld, and choosing No will result in $143 withheld. 

The reason for this option when you complete your Tax File Number Declaration form is to account for the first $18,200 of income on which you will not need to pay tax. If you believe you will be earning above this threshold in your primary job, then it is safer for the higher rate of tax to be withheld from your second job, as the tax-free threshold has already been considered in your primary job. 

 

As an example:

  Say your first job earns you $20,000, and your second job earns you another $10,000. 

If the Tax Free Threshold is claimed on Job 1 and 2, Job 1 withholds about $312 throughout the year, Job 2 withholds $0. 

Come tax time, your payable tax on this $30,000 income will come to  $2,242.

(You can use the Simple Tax Calculator to see this). 

  You'll notice that not nearly enough tax was withheld to cover the liability, because both jobs were trying to account for the tax free threshold. 

  Let's try again, but without claiming the threshold on Job 2. Suddenly because of this change, job 2 withholds $2,184 throughout the year, which covers the liability. 

  If there had been only Job 1, the tax on income would be about $342, and the withheld amount would just about cover it. (There would likely be offsets that would reduce payable tax enough to result in a credit on the return). 

 

So it seems like a huge jump, and that's because there's an $18,200 difference that you're teling your employer to account for or not. I'd recommend having a play around with both of those calculators, or giving the ATO Personal Infoline a call on 13 28 61 if you think a verbal explanation would help further. 

 

All the best Smiley Happy

4 REPLIES 4

Newbie

Replies 0

The second job always gets taxed higher. You have to remember this income at tax time is added to your first job income. Tax is applied at your marginal rate, typically 35%. If you dont pay this rate you will have a shortfall at tax time.

Most helpful response

ATO Certified Response

Enthusiast

Replies 0

Hi Petey, 

 

The difference in your results of $45 and $143 comes from whether you would like to claim the Tax Free Threshold on your second job. 

 

Have a look at the tool "Tax Withheld Calculator". 

At the question "Has the payee claimed the Tax Free Threshold?" choosing Yes will result in $45 being withheld, and choosing No will result in $143 withheld. 

The reason for this option when you complete your Tax File Number Declaration form is to account for the first $18,200 of income on which you will not need to pay tax. If you believe you will be earning above this threshold in your primary job, then it is safer for the higher rate of tax to be withheld from your second job, as the tax-free threshold has already been considered in your primary job. 

 

As an example:

  Say your first job earns you $20,000, and your second job earns you another $10,000. 

If the Tax Free Threshold is claimed on Job 1 and 2, Job 1 withholds about $312 throughout the year, Job 2 withholds $0. 

Come tax time, your payable tax on this $30,000 income will come to  $2,242.

(You can use the Simple Tax Calculator to see this). 

  You'll notice that not nearly enough tax was withheld to cover the liability, because both jobs were trying to account for the tax free threshold. 

  Let's try again, but without claiming the threshold on Job 2. Suddenly because of this change, job 2 withholds $2,184 throughout the year, which covers the liability. 

  If there had been only Job 1, the tax on income would be about $342, and the withheld amount would just about cover it. (There would likely be offsets that would reduce payable tax enough to result in a credit on the return). 

 

So it seems like a huge jump, and that's because there's an $18,200 difference that you're teling your employer to account for or not. I'd recommend having a play around with both of those calculators, or giving the ATO Personal Infoline a call on 13 28 61 if you think a verbal explanation would help further. 

 

All the best Smiley Happy

Newbie

Replies 0

HI I have read your post below and I also had a very similar questions which I have just posted here:- It looks very similar but the only difference is that my second employer has offered to pay me directly in my bank account and we haven't yet discussed the tax free withhold option. Obviously I am claiming that from my employer -1 already 

 

I am feeling a bit lost as the total income for the year for my second job will be around $3000 ( without tax) so how much tax I will have to pay on that ?

ATO Community Support

Replies 0

Hi @Vaibs2388,

 

We have Weekly, Fortnight and Monthly tax calculators available on our website which will give you the amount of tax to be withheld using tax-free and non tax-free thresholds for each pay period.

 

These calculators are linked bellow. You just need to work out your pay received before tax for a specific pay period and enter the amount into the calculator to get the non tax-free threshold tax amount.

 

Links

Weekly tax Calculator

Fortnightly tax Calculator

Monthly tax Calculator