Australian taxpayers have a common misconception that having a second job results in paying additional tax that would otherwise not occur. If you’re an Australian resident for tax purposes, the first $18,200 you earn each year is tax free. This is more commonly known as the ‘tax-free threshold’, which should generally only be claimed from one employer at a time.
There are no additional tax fees or penalties for having a second job. You can expect to pay the same amount of tax whether you earn $1000 a week through a single job or multiple jobs. The ATO calculates the tax you need to pay based on your combined income.
To ensure your employers withhold enough tax from your take home pay, you should claim the tax-free threshold from only your main employer, and not claim it from any other employers.
In doing so, you avoid the risk of not paying enough tax throughout the year, resulting in a payable come tax time. If you’re already claiming the tax-free threshold from your first employer and you get a second job, your second employer will withhold tax from the first dollar you earn. This is different to your main employer who waits until after $18,200 to begin taxing you. This is why it can feel like you’re paying more tax when you begin working a second job.
If you’re wanting advice on how to go about claiming deductions for both jobs and keeping accurate records, call or email us, we’re happy to help.