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How much tax should I pay on a second job? Claiming the tax-free threshold.

Started ‎5 March 2021 by
Modified a week ago by

If you’re an Australian resident for tax purposes, you don’t have to pay tax on the first $18,200 you earn each year. We call this the ‘tax-free threshold’, which you should generally only claim from one employer at a time.

Why does it feel like I pay more tax on my second job than my first job?

You don’t pay extra tax for having a second job. You pay the same amount of tax whether you earn $1000 a week through having a single job or multiple jobs.  When you do your tax return, we add all your income together and calculate the tax you need to pay based on your combined income.

To help make sure your employers withhold enough tax from your take home pay, you should claim the tax-free threshold from only your main employer, and not claim it from any other employers.

Say you’re already claiming this tax-free threshold from your first employer and you get a second job. Your first employer won’t withhold tax from the first $18,200 you earn each year. However, your second employer will withhold tax from the first dollar you earn. This is why it can feel like you’re paying more tax on your second job.

You can use the ATO’s online tax withheld calculator to find out how much tax should be withheld on your income.

I don't think I will earn over $18,200. Can I claim the tax-free threshold for both jobs?

If your total annual income will be less than $18,200, you can claim the tax-free threshold from both jobs. Keep in mind that if you earn more than $18,200, you’ll likely receive a tax bill at the end of the year.

 

Can I change which job I'm claiming the tax-free threshold for?

Yes, you can change which job you claim the tax-free threshold for at any time. To do this:

  • Complete a Withholding declaration with your correct details
  • Go to Question 5 ‘Do you want to claim the tax-free threshold from this payer’
  • Select whether you want to claim the tax-free threshold or not
  • Give that form to your employer

If you stop working for an employer, you don’t need to do anything. You will automatically stop claiming the tax-free threshold from them when they stop paying you.

How can I figure out my residency for the tax-free threshold?

Only Australian residents for tax purposes can claim the tax-free threshold.  If you start or stop being an Australian resident for tax purposes during the income year, you’ll receive a part-year tax-free threshold.

Non-residents for tax purposes can’t claim the tax-free threshold and must pay tax on every dollar they earn. 

We have information and decision tools to help you work out if you’re a resident for tax purposes.  Use them to help you understand if you can claim the tax-free threshold:

  1. If you’re in Australia for a working holiday read this information.
  2. If you’re in Australia for any other purpose use this tool.
  3. If you’re leaving or have left Australia, use this tool.

 

Can't find the answer to your question here?

You can ask the Community or read more information at Income from more than one job

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