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  • Income from more than one job

    The tax-free threshold reduces the amount of tax that is withheld from your pay during the year. If you have income from more than one employer, you can generally only claim the tax-free threshold from one of them.

    On this page:

    Claiming the tax-free threshold

    The tax-free threshold is $18,200. If you're an Australian resident for tax purposes, the first $18,200 of your yearly income isn't taxed. You can claim the tax-free threshold to reduce the amount of tax that is withheld from your pay during the year.

    When you start a job, your payer (employer) will give you a Tax file number declaration form to complete. Centrelink is also a payer and they will give you this form if you apply for their payments.

    If you choose to claim the tax-free threshold, you tell your payer by answering Yes at question 9 'Do you want to claim the tax-free threshold from this payer?’ on the Tax file number declaration.

    The $18,200 tax-free threshold is equivalent to:

    • $350 a week
    • $700 a fortnight
    • $1,517 a month.

    When your taxable income exceeds the tax-free threshold, the excess is taxed.

    If you have income from more than one payer

    You may be paid by two or more payers at the same time if you:

    • have two or more jobs
    • have a regular part time job and receive a taxable pension or government allowance.

    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.

    Your other payers are required to withhold tax from your income at a higher rate. This is called the 'no tax-free threshold' rate. This reduces the likelihood of you having a tax debt at the end of the financial year.

    Sometimes the total tax withheld from all sources may be less or more than needed to meet your end-of-year tax liability. These withheld amounts are credited to you when you lodge your income tax return. 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 us so that you have paid enough tax for your income.

    You can apply to change the amounts of tax withheld from your income to more closely match your end-of-year tax liability:

    If your income is $18,200 or less

    If you're certain your total annual income from all your payers will be $18,200 or less, you can choose to claim the tax-free threshold from each payer.

    If you do this and your total income later increases to above $18,200, you'll need to provide one of your employers with a withholding declaration to stop claiming the tax-free threshold from that payer.

    Example – income $18,200 or less

    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) during the 2019–20 year.

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

    If Jeff doesn't claim the tax-free threshold through his employer for his part-time job, $66 per fortnight would be withheld and the total tax withheld from Jeff's payments during the year would be $1,716.

    Assuming that Jeff doesn't have other income, his taxable income for the year will be $18,000 and the tax payable at the end of the financial year would be nil. He would receive a refund of the total tax withheld of $1,716 when he lodges his 2020 income tax return.

    If Jeff expects to receive same income for the next income year, he could choose to claim the tax-free threshold for his part-time job as well through his employer so that no tax is withheld from payments made to him. This can be done by completing a withholding declaration and providing it to his employer.

    End of example

    If your income is over $18,200 and too much tax is withheld

    If your income is more than $18,200 and too much tax was withheld in the income year, you can apply to reduce the amount of tax withheld from your payments. You will need to complete and lodge a PAYG withholding variation application with us.

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

    Example – too much tax withheld during the year

    Sue has two jobs during the 2019–20 year. 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.

    As Sue doesn't claim the tax-free threshold from her restaurant employer, $84 per fortnight is being withheld ($2,184 for the year).

    Since Sue doesn't have any other income, her tax payable or refundable when she lodges her tax return would be calculated as follows:

    Taxable income

    $24,000

    Income tax payable on $24,000

    $1,102

    Less low income tax offset

    $445

    Less low and middle income tax offset

    $255

    Plus Medicare levy (10% of income over $22,801)

    $119.90

    Total tax and Medicare levy

    $521.90

    Credit for total tax withheld

    $2,184.00

    Tax refund due to Sue

    $1,662.10

    The tax refund of $1,662.10 arises because too much tax was withheld from the income Sue received from her employers during the year. If Sue wants, she can apply to us for a withholding variation to reduce the amounts of tax withheld so that she receives extra net pay during the year, rather than receiving a large tax refund at the end of the financial year.

    End of example

    If too little tax is withheld

    Sometimes the total tax withheld from your payments may be too little to cover your tax liability for the income year.

    To avoid an end-of-year tax debt, you can ask one or more of your payers to increase the amount they withhold from your payments. Your request should be in writing, but can be in any format – you can send an email request, a paper or computer-based form.

    Example – too little tax withheld

    Pierre receives a taxable pension and has a part-time job. Over the course of the 2019–20 year, he receives:

    • $30,000 from the pension – Pierre's payer applies the Medicare levy and tax-free threshold to his fortnightly payments
    • $30,000 from the part-time job – Pierre's employer applies the Medicare levy and no tax-free threshold to his fortnightly payments.
    Pierre's 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, the total tax withheld from Pierre's income will be $10,972 ($422 × 26).

    When Pierre lodges his tax return for the year, the actual amount of income tax he has to pay, or tax refundable to him, will be calculated as follows:

    Taxable income

    $60,000

    Income tax payable on $60,000

    $11,047

    Less low income tax offset

    $100

    Less low and middle income tax offset

    $1,080

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

    $1,200

    Total tax and Medicare levy

    $11,067

    Credit for total tax withheld

    $10,972

    Tax payable

    $95

    Pierre will have a tax debt of $95 as insufficient tax was withheld during the year.

    Pierre can ask one or both of his payers to withhold extra tax to cover the shortfall. Alternatively, he can put money aside to ensure that he can pay his tax bill when it falls due.

    End of example

    See also:

    If you're a resident for part of the year

    If you become or cease being an Australian resident for tax purposes during the financial year, you will receive a part-year tax-free threshold.

    If you're a non-resident, you're not entitled to the tax-free threshold. This means you pay tax on every dollar of income you earn in Australia.

    See also:

    Last modified: 10 Jun 2020QC 50527