Can I Claim the Tax-Free Threshold at Two Jobs?

Can I Claim the Tax-Free Threshold at Two Jobs?

Over the past decade or so, we’ve seen shifts in the workplace. One of these shifts is an increase in multiple-jobholders.  

It’s no longer odd to see a father at home with the kids on a Monday afternoon, a woman owning a billion-dollar company, or people (male or female) working for more than one employer at a time. No matter what the job situation may be, we all have one thing in common that we need to prepare for; taxes.

The ATO has created an income limit known as the tax-free threshold. This allows Australian workers to not be taxed on income earned up to a certain point. That limit is $18,200.

So, how do you claim this tax-free threshold at two jobs? Well, it depends.

How much of an income are you earning?

The ATO typically allows you to only claim the tax-free threshold from your primary source of income, or in other words, the job that earns you the higher salary.

If you have a secondary job that earns you a bit less income, that employer will withhold tax at the higher, ‘no tax-free threshold’ rate.

Is there an exception to the rule?

Isn’t there always? According to the ATO, if you are absolutely positive that your total income between both jobs will be less than the tax-free threshold of $18,200, then you can choose to claim the tax-free threshold at both jobs. Be extra careful when making this decision. If your second source of income causes you to exceed the threshold amount and wasn’t withheld at a higher rate of tax, then you could be faced with a tax debt at the end of the financial year to make up for the difference.

Let’s take a look at Brady’s tax situation:

Brady is employed as a nurse at his local hospital part-time. He also works the night shift as a doorman for a little extra income. As a nurse, he earns $12,000 per year, while the doorman gig earns him $6,000 per year. Together, this equals out to be less than the tax-free threshold. Therefore, he can claim the exemption from tax on both sources of income.

 

What if your primary source of income (alone) exceeds the tax-free threshold?

This is pretty common and nothing to worry about. Your employer should be familiar with this. Once the tax-free threshold is met for the year at your primary job, your employer will begin withholding at the tax rate associated with your specific tax bracket. This will be done automatically so that you do not need to keep track of each and every dollar earned.

Let’s take another look at Brady:

Starting this month, Brady was offered a full time nursing position with a raise and left his position as a doorman. He is now earning $30,000 per year. He can still claim the tax-free threshold at his nursing job, for his earnings up to $18,200. Once that threshold is met, his payer will begin taxing the remaining income at the ATO rate based on his total annual income.

 

So, how can you avoid overpaying or underpaying tax?

There are certain precautions that you can take so that you are paying just the right amount of tax:

  • Do not claim the tax-free threshold on the TFN declaration for both jobs. This is a standard form that you must complete when starting a new job. In Box 8, you are given the option of whether or not you will claim the tax-free threshold. Unless you earn under $18,200 at both jobs combined, you’ll only tick YES for your primary job (again, the one at which you earn more total in a year).
  • Know how much you earn in a year. This is important for more reasons than one. Whether you want to make sure you are being taxed correctly or think it’s time to negotiate a raise with your employer, this yearly figure, big or small, can mean a lot. It figures in all the calculations above – whether to claim the tax-free threshold at more than one job, as well as how much tax you expect to pay.

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39 Responses to “Can I Claim the Tax-Free Threshold at Two Jobs?”

  1. Nevaeh Hurae says:

    Hi, I just recently found out that I have not been claiming taxfree threshold for every job I have worked at for the past 5 years but then was told that, when you fill out your form for tax you are ment to claim if it is your only job you are working at and maybe I should see a tax agent to do my tax and look at my past years tax returns aswell I am confused I just never claimed it as I thought you could only claim it if you are not going to make over the threshold

  2. James says:

    Hey, I’ve just been offered another job as a casual employee, I’m currently working 6-10 hours a week and willl be offered around 10-20 hours a week at the new job. My old job has said they still want me to do two hours on Sunday once a fortnight and two hours on a Wednesday weekly. What should I do regarding tax and what’s the best option for my case.
    Thankyou!
    James

  3. Tax Advisor says:

    If you have not claimed it in the previous years, within your return it should indicate that the tax free threshold was automatically taken into account to reduce your total taxable income. Rest assured if you have reported your income accurately there should be no need for concern with not claiming the tax-free threshold. It’s best that you claim this threshold from now on, so that as much of the threshold becomes available for you to use throughout the year. The threshold rates can be found on the ATO Website for the specific prior tax years.

  4. Tax Advisor says:

    Depending on the total salary you are earning, if your highest paying job has a salary of less than the tax-free threshold of $18,200 for the year, you should claim the tax-free threshold for that specific job transcript. If however both of your income earned at the two places of employment exceeds $18,200, it’s best not to claim the tax-free threshold for both jobs. Only if the combined income is less than $18,200 is it advised for you to claim the threshold for both jobs.

  5. Michelle says:

    If i am getting taxed on my second job at 45% (or whatever it it) will i get the difference back at the end of the tax year? So if my annual income doesn’t exceed the highest level, do i get my tax back on the extra tax i paid??

  6. Tax Advisor says:

    Depending on the overall income that you earn, after you have taken your deductions, you will have a total tax that is due. If you have overpaid, you will receive back a return. Generally, it is best not to claim the threshold on both jobs, as it may result in your owing the ATO because only the first $18,200 for the season 2015-2016 of your income is tax-free if you are a Australian Resident. You can view these the thresholds for all years through the ATO website.

  7. Two Jobs says:

    I work two jobs that both pay around double the tax-free threshold. Is it illegal to claim the tax-free threshold on both, accrue interest on the difference in a high-yield savings account, and then pay the tax man a lump sum as late as possible (lodging the return at the end of October, then paying the liability on its due date)?

    I’m capable of managing my finances such that there’s zero risk of me not having the money when it is time to pay, and to be honest, I’d rather the money be working for me, than overpaying the ATO and getting it back as a tax return.

  8. Tax Advisor says:

    I advise that you follow the instructions on the withholding declaration form, however, it is still up to your discretion.

  9. contractor and employee says:

    Hi,
    I have an ABN and I earn about $17000 doing contract work.
    i have just started another employed job worth $23000.
    what am I best to do with TF threshold? Dont claim it from my employer so I dont have to pay tax on my business earnings, or do I have to (or should) claim it from my employer and then pay tax on my business earnings?

  10. Tax Advisor says:

    If you claim the TFH for your business, as a sole trader, it will become your responsibility to pay the proper amount of taxes due when you lodge, as all of the income was not taxed and you received the full amount. If you, however, choose to claim the tax-free threshold for your ABN contract work and not claim on your employed work, you will have the proper amount of taxes withheld, which will end up resulting in a low tax due or a return when you lodge.

  11. Michael Smith says:

    I have worked now 3 jobs within this week and have always ended one before starting another, can i claim tax back from all 3 jobs, it would exceed the 18000 on one of the jobs but the others it wouldnt, really confusing for me. cheers

  12. Tax Advisor says:

    Hello Michael,

    You may claim the tax-free threshold only if all of your income is collectively less than $18,000 for the year. This would not be determined by each job separately. You would most likely not be able to claim the tax free threshhold since one of your jobs has already exceeded the $18,000 threshold. Whether or not you can get the taxes back is determined on your tax return.

  13. Joshin says:

    Hey,
    I am an international student and I am unware of all the tax rules in Australia. I have been working in two jobs and I have claimed tax free threshold on both. I have earned around 13k in my first job and 11k in second job so total income is 24k. Can I claim tax free threshold for 18k and pay tax for remaining 6k?? or Do I get a huge tax bill for 11k?. is the tax for second job is 45%?

  14. Tax Advisor says:

    In order to claim the tax-free threshold, you will need to first determine whether or not you are an Australian resident for tax purposes. If you are not an Australia resident for tax purposes, then all of your income is subjected to taxation. If you have determined you are a resident, then only your remaining income after the first $18,000 dollars that you have earned will be subjected to taxes.

  15. Joshin says:

    I am considered as Australian resident for tax purposes. Thanks for the advice, helps me a lot.

  16. sabend says:

    How can I do my tax returns when I have worked for 3 employers and I have 3 payment summaries? I do my tax return myself via Mygov and I still wish to use that. Please advise me as soon as you are able to.
    Thanks

  17. shridhar manjunath says:

    what is the tax on second job?

  18. Allan says:

    Hi,
    I have changed my job during the financial years while i earned around 3,000$ for the old job. I started my new one and ticked to claim my tax threshold for this job, which I earned 25,000$. Do i have to claim for tax of both or just the second one that gave me most income?

  19. NigR says:

    I worked 2 jobs this year – one that grossed $41542 and paid $9086 tax on, and the other that I grossed $33909 and paid $13000 tax. I also have a HELP debt. From different calculators I’ve used, it appears I only should’ve paid just over $15000 tax so I assume I’ve overpaid by around $7000 (I did ask my second employer to take out extra tax) but my return estimate so far is only at $700! Can this be right. I was counting on getting back a far bit more.
    Many thanks!

  20. Tax Advisor says:

    Hello Nigel,

    Tax calculators should be accurate but if you would like to get more information regarding your refund you may get started with your return and contact our customer service to better assist you.

  21. Tax Advisor says:

    Hello Sabend,

    You can lodge your tax return using our website or another website of your choice. Be sure to report all PayGs.

  22. Tax Advisor says:

    Hello Shridhar,

    Tax withheld from your job is found on your PayG.

  23. Tax Advisor says:

    Hello Allan,

    The ATO typically allows you to only claim the tax-free threshold from your primary source of income, or in other words, the job that earns you the higher salary, for example, $25,000. Your secondary job that earns $3000, will withhold tax at the higher rate.

  24. Lisa says:

    Please help!
    I went to a tax account last year with help in regards to having 2 jobs (first time I’ve had two jobs). Unfortunately I had a tax debt last year due to not taking enough tax out. I’m claiming the tax free threshold on my primary job and no tax free threshold on my 2nd. I was told by my account last year that if I asked to take an extra $15 off my wage at my 2nd job/pay check I would receive a better tax return this year if around $400-$500. So far no looking promising with only a return of maybe $150. My primary job I earned $39094 with $5226 of tax and my 2nd job I earned $10,289 with $2835 of tax

  25. Marnie says:

    Hi
    I currently am doing relief work at two different places, as it’s relief I do not know how much I will earn in the financial year. Also not knowing which will pay higher by end of financial year.
    Do I tick yes or no on second job tax form
    Thanks

  26. donna holmes says:

    I work for several nursing agencies but never at the same time. I may work half the year with one agency and the rest of the year with another one or two. I am only ever working for one employer at a time so does that mean I can only claim the tax free threshold with one employer? Sometimes I work six months but am paying a lot of tax because they are not considered my “primary employer”. thanks

  27. jade says:

    I was working full time for 3 years i claimed the tax free threshold. I quit that job December 2017 and started a new full-time job January 2017. I claimed the tax free threshold for my new job. I got my tax return done and got told i should of ticked NO for the tax free threshold, because i ticked yes on my last job. Now i have a tax bill. This did not make sense to me

  28. sonu says:

    hi. my income from primary job was $74000 and i also worked as a casual and had earned another $14000. i ahve family my she is looking after our baby and currently stays at home. but i didnt declared it as asecondary income. i am also getting frindge benifits. i am just worried how much tax i have pay this time because last time i end up paying $2600 back to ATO.

  29. Helen says:

    Hi
    My daughter had one job she earned under 18k so no tax paid, she then left that for her full time job where she’s earned over 18k . She’s filled in her tax return with both group certificates and her tax she gets back reduces when she puts in her under 18k return. Does she need to include her under 18k group ceritifcate if she’s paid no tax on that job?

  30. Renee says:

    I worked in one job earning 20000 for this tax year then left that job and started a new one in april that has so far paid me 8000. Do i put bprg jobs on my return? Thanks

  31. James says:

    Is it illegal to not claim tax back on my second job. i earned a total of 30,000, 20 at one job and 10 at another. Is it possible to only claim money on the higher earning job which returns me 2,000 opposed to claiming both and only getting a total of 900 back

  32. Tax Advisor says:

    Hello James,

    The ATO typically allows you to only claim the tax-free threshold from the job that earns you the higher salary. Since your second job earns you a bit less income, that employer will withhold tax at the higher, ‘no tax-free threshold’ rate.

  33. Tax Advisor says:

    Hello Renee,

    Report jobs that you received a Payment Summary from. Since you recently started a new job, it is likely you did not receive a Payment Summary so soon in the year. Contact your employer and the ATO for more details.

  34. Tax Advisor says:

    Hello Sonu,

    Feel free to use Elodge’s 2016-2017 Tax Calculator found on our website to determine your tax liability or tax refund.

  35. Tax Advisor says:

    Hello Marnie,

    This is entirely up to you. The ATO typically allows you to only claim the tax-free threshold from your primary source of income, or in other words, the job that earns you the higher salary. If you have a secondary job that earns you a bit less income, that employer will withhold tax at the higher, ‘no tax-free threshold’ rate.

  36. Tax Advisor says:

    Your daughter must file her return with all of the tax income statement information that she received for the tax season. Do not be concerned with having to report your entire income that you earned for the year, as the system will take into account your Tax-Free threshold as well as inquire about whether or not you chose this option. Your return will be processed accordingly in the manner that you file it.

  37. Tax Advisor says:

    Typically when claiming the tax-free threshold you want to ensure that you are making under the threshold. So if you had two different jobs for the year and made under the threshold, it would be fine for you to claim this option for both jobs. However, if the combined income that you earn exceeded this threshold, then you should not have claimed this option for both. You will need to indicate what you claimed within your return, and you may end up having a bill higher than usual because not enough taxes were withheld.

  38. Tax Advisor says:

    If you can determine the income that you are earning from each employer separately, you can claim the threshold for all the employers that have the income sum of $18,200 or lower for that specific year. However, if you cannot determine your income separately, it may be best for you to claim your threshold from your higher earning income job instead.

  39. Tax Advisor says:

    The return that you are receiving is your money that is withheld throughout the year. Your taxes are not subjected to any changes as long as the income that you are earning remains the same for each financial year and the tax-free threshold does not change. It is in your best interest to have a return as close to $0, as this means that you are able to use the most of the income that you earn throughout the year without having to wait for it to be available for you as a return in the following Financial year filing.

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