When you start a second job your payer will ask you to complete a Tax file number declaration. This form allows you to quote your tax file number (TFN) and provide other information to help your payer calculate the correct amount of tax to withhold from your pay, and send to the Tax Office.
Useful publications:
- Tax file numbers
This will help you if you do not have a TFN, or you don’t know what your TFN is.
- Residency - overview
This will help you determine whether or not you are an Australian resident for tax purposes.
If you are an Australian resident for taxation purposes, the first $6,000 of your yearly income is not taxed. This is called the tax-free threshold. You can claim the tax-free threshold from one payer only.
If you have more than one payer at the same time, you should not claim the tax-free threshold from your second payer. It is against the law to do so and may lead to a tax debt at the end of the financial year.
The tax-free threshold should only be claimed with the payer who usually pays the highest salary or wage (this is known as your primary source of income). If you earn any additional income (for example, from a second job) then your other payer is required to withhold tax at a higher rate.
You could be disadvantaged if your payer treats you as having two part-time jobs.
If you think you are having too much tax withheld from a source of income, you can arrange for a varied calculation to be used by one or more payer/s. This is done by lodging a variation request on the prescribed form called PAYG withholding variation application 2010. If you have difficulty downloading, completing or transmitting the electronic application, phone 1300 360 221 for assistance.
When the PAYG withholding variation application form is received by the Tax Office the varied amount will then be calculated and provided to the payer/s with new instructions for withholding tax. This variation should only be undertaken if you are certain of your income amounts, and you are disadvantaged by the standing rates or normal arrangements.
Where an insufficient amount of tax is being withheld, you can directly instruct a payer to withhold a higher amount of tax. However, if your payer is withholding tax at the prescribed rates, you are under no obligation to increase the amount of tax being withheld. You suffer no penalty at the end of the financial year, other than having a further amount of tax to pay.
Example
Juan is employed in two part-time jobs. Over the course of the 2008-09, year, he receives:
- $25,000 from the first job, and
- $20,000 from the second job.
At the end of the financial year if Juan continues to pay $258.00 PAYG income tax each fortnight, he will have paid a total of $6,708 in income tax, ($258 x 26 weeks).
By the end of the financial year, if Juan receives the same fortnightly income of $1730.77, incorporating the tax-free threshold and Medicare levy, and if Juan has, no deductions or tax offsets to take into account, he can expect to have to pay an additional $1,467.00 income tax.
Taxable income: $45,000
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Income tax payable on $45,000
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Medicare levy 1.5% of $45,000
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Total tax and Medicare levy
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Total tax withheld (26 x $258)
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Shortfall
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Juan can choose to ask one or both of his employers to withhold extra tax to cover the shortfall, by supplying them with a completed Withholding declaration – upwards variation. Alternatively, he can put money aside to ensure that he can pay his tax bill when it falls due.
Any source of income earned in addition to your primary source of income is known as additional income. Like a second job, having other types of additional income may lead to the tax withheld from your pay being less than the amount due on your total taxable income.
Additional income may include the following:
- salary and wages
- government pensions, benefits and allowances
- bank interest
- bonuses and overtime paid to an employee
- non-government pensions or annuities
- dividends and other income from investments
- foreign source income - unit trust
- rental income
- business profits.
Additional income does not include the following:
Calculating the correct amount of tax
If you aren’t sure whether your payer is withholding the correct amount of tax, read How much tax should be taken from my pay?
If you are currently claiming the tax-free threshold with a payer and you want to claim it from a new payer, you must advise your first payer that you no longer wish to claim the tax-free threshold. To do this you need to complete a Withholding declaration.
When you have a second job you may be able to claim the cost of travelling directly between two separate places of employment.
You can claim the cost of travelling:
- from your normal workplace to an alternative workplace—for example, a client's premises—while still on duty, and back to your normal workplace or directly home
- from your home to an alternative workplace for work purposes and then to your normal workplace or directly home.
Example
Sue is a clerk at a large department store who travels by bus from her normal workplace to her second job as a call centre operator. After finishing work as a call centre operator, she travels directly home.
- Sue can claim the cost of travel from her normal workplace to her second.
- She cannot claim the cost of travelling from her second job to her home.
For further information about deductions, refer to Claiming travel expenses.
Tax offsets (sometimes also referred to as rebates) directly reduce the amount of tax you must pay. They are not the same as deductions, which are taken off your income before your tax is worked out.
With a tax offset, we work out the tax due on your taxable income then reduce it by the total amount of any allowable tax offsets.
If you require further information about your tax obligations, or need help applying this information to your own situation, please phone us on 13 28 61.
Last Modified: Saturday, 6 June 2009
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