• When you have income from two payers

    This publication provides information about how tax is withheld if you are paid by two or more payers at the same time. For example:

    • You work four days a week for one employer and one day a week for another employer
    • You receive a taxable pension and also have a regular part time job
    • You receive a taxable Australian Government allowance or payment and also have a regular part time job.

    What are your tax obligations?

    When you started your job, or commenced receiving the taxable payment, your payer asked you to complete a Tax file number declaration. This form allowed you to quote your tax file number (TFN), claim the tax-free threshold and provide other information that helped your payer calculate the correct amount of tax to withhold from your pay, and send to the Australian Taxation Office (ATO).

    Useful publications

    • Tax file number
      This will help you if you do not have a TFN, or you do not know what your TFN is.
    • Work out your tax residency
      This will help you determine whether or not you are an Australian resident for tax purposes.

    Calculating the amount of tax to be withheld

    Tax-free threshold

    If you are an Australian resident for taxation purposes, the first $18,200 of your yearly income is not taxed. This is called the tax-free threshold. If you have more than one payer at the same time, we generally require that you only claim the tax-free threshold from the payer who usually pays the highest salary or wage (this is known as your primary source of income).

    If you earn additional income (for example, from a second job or a taxable pension) your second payer is required to withhold tax at the higher, 'no tax-free threshold' rate.

    If your second payer does not withhold a higher rate of tax this may lead to a tax debt at the end of the financial year.

    However, if you are certain your total income for the year will be less than $18,200 you can claim the tax-free threshold from each payer.

    Note:

    If you have claimed the tax-free threshold from more than one payer, you will need to provide a new withholding declaration to one of your payers if your total income increases to be above $18,200.

    Withholding tax tables

    Your employer or payer uses tax tables to work out how much tax to withhold from your payment.

    In most cases, where you have income from one payer, the amounts withheld will be sufficient to cover the tax payable on your payments at the end of the financial year.

    When a person has more than one job or payer, the total tax withheld from all sources may result in too much tax being withheld (that is, over-withholding) or insufficient tax being withheld (that is, under-withholding).

    See also:

    Examples and what you can do

    Example 1: Over-withholding and yearly income less than $18,200

    Jeff has a taxable pension of $384.61 per fortnight ($10,000 for the year) and also a part-time job earning $307.69 per fortnight ($8,000 for the year).

    Jeff claims the tax-free threshold on his pension and no tax is withheld during the year.

    If Jeff does not claim the tax-free threshold through his employer for his part-time job, $68 per fortnight would be withheld and the total tax withheld from Jeff's payments during the year would be $1,768.

    Assuming that Jeff does not have other income, Jeff's tax payable at the end of the financial year would be nil. He would receive a refund of the total tax withheld of $1,768.

    In this case, Jeff could also claim the tax-free threshold for his part-time job through his employer so that no tax is withheld from payments made to him throughout the year. This can be done by completing a Withholding declaration.

    End of example

     

    Example 2: Over-withholding and yearly income more than $18,200

    Sue has two jobs. As a part-time retail sales assistant she earns $538.46 per fortnight ($14,000 for the year). She also works in a restaurant earning $384.62 per fortnight ($10,000 for the year).

    Sue claims the tax-free threshold from her retail employer and has no tax withheld.

    If Sue does not claim the tax-free threshold from her restaurant employer, $86 per fortnight would be withheld and the total tax withheld from Sue's payments during the year would be $2,236.

    Assuming that Sue does not have other income, her tax payable when she lodges her return would be:

    Taxable income: $24,000

     

    Income tax payable on $24,000

    $1,102

    Less
    Low income tax offset

       $445

     

    $657

    Plus
    Medicare levy (10% of income over $21,335)

       $266.50

    Total tax and Medicare levy

    $923.50

    Credit for total tax withheld (26 x $86)

    $2,236.00

    Refund due

    $1,312.50

    The refund of $1,312.50 arises due to Sue having over-withholding on payments she received from her employers during the year. Sue can apply to the ATO to arrange for a withholding variation to reduce the over-withholding so that she receives extra net pay during the year, rather than a large tax refund at the end of the financial year.

    End of example

     

    Example 3: Under-withholding

    Pierre receives a taxable pension and is employed in a part-time job. Over the course of the 2015-16 year, he receives:

    • $30,000 from the pension, and  
    • $30,000 from the part-time job.

    Pierre is paid fortnightly.

    Using the pay as you go (PAYG) withholding Fortnightly tax table and applying the Medicare levy and tax-free threshold to the pension and Medicare levy and no tax-free threshold to the part-time job, the tax withheld is:

     

    Annual income

    Fortnightly income

    Fortnightly Tax withheld

    Pension

    $30,000

    $1,153.84

    $108.00

    Part-time job

    $30,000

    $1,153.84

    $314.00

    Total

    $60,000

    $2,307.68

    $422.00

    At the end of the financial year if Pierre continues to have tax withheld of $422.00 each fortnight, he will have paid a total of $10,972 in income tax ($422 × 26 fortnights).

    When Pierre lodges his tax return for the year, the actual amount of income tax that he will have to pay will be:

    Taxable income: $60,000

     

    Income tax payable on $60,000

    $11,047

    Less
    Low income tax offset

    $100

     

    $10,947

    Plus
    Medicare levy (2% of $60,000)

    $1,200

    Total tax and Medicare levy

    $12,147

    Credit for Total tax withheld (26 x $422)

    $10,972

    Tax payable

    $1,175

    Pierre will have a tax debt of $1,175 as insufficient tax was withheld during the year on payments he received from his pension fund and employer.

    Pierre can choose to ask one or both of his payers 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.

    End of example

    Applying to the ATO for a variation

    You can apply for a variation by lodging a PAYG withholding variation application. If you have difficulty downloading, completing or transmitting the electronic application, phone 1300 360 221 for assistance.

    When the ATO receives the PAYG withholding variation application form, we calculate the varied amount and provide the payers with new instructions for withholding tax. You should only apply for this variation if you are certain of your income amounts, and you are disadvantaged by the current withholding rates.

    Next step:

    If you require further information about your tax obligations, or need help applying this information to your own situation, phone us on 13 28 61.

    • Last modified: 21 Jun 2016QC 16594