Most people have heard somewhere along the frape vine that having a second job means double the tax payable. The fact of the matter is, your second job wont increase your tax payable , though you’re earning more, which means you will pay more tax.
Here’s a few tables to make a but more sense of it all.
This table explains what income tax rates/individual tax rates are. These are also commonly known as tax brackets. These rates determine how much tax you’ll pay and how tax offsets are calculated, regardless of having a second job or not.
It’s easy to see how people misinterpret having a second job as to increasing their tax payable. This table, along with the one above, shows that earning more money does mean paying more tax, but it doesn’t mean you’re pay double or paying more than what you would earning the same amount working just one job.
As you can see, regardless of having one or two jobs, when you earn a total of $30,000, you’re still going to be paying the same amount tax. At the end of the day, all that matters is how much income you received, not which job or how many jobs you got the income from.
These estimates are of course without considering any tax deductions, which in turn will reduce the amount of tax payable.
What is the Tax-Free Threshold?
The Tax-Free Threshold is a way for Australian residents for tax purposes to reduce the amount of tax withheld from your pay throughout the year.
- If you earned less than $18,200 for the year, your employer would not take tax out of your pay.
- If you earned more than $18,200 for the year, your employer would start taxing you accordingly.
As well as being an Australian resident for tax purposes you must also only claim the tax-free threshold on one of your jobs (usually the one that pays more) and check/tick that you want to claim the tax-free treshold from your employer when you submit your TFN declaration.
If you’re certain that your total income for the entire financial year (1st July to 30th June), then you can claim the Tax-Free Threshold on both of your jobs. If your income increases to more than $18,200 you will have to provide one employer with a withholding declaration. This essentially means you’re bowing out of claiming the tax-free threshold on one of your jobs.
If you need more assistance in understanding anything mentioned above, or you’d like to get your tax return started, contact our friendly team today.
