Your income may come from one or more payers at the same time. Payers include employers, government agencies, or work you do as a sole trader. Show You can choose to claim or not claim the tax-free threshold ($18,200) on the income you earn. If you claim the tax-free threshold:
When to claim the tax-free thresholdIf you have more than one payer at the same time, generally, you only claim the tax-free threshold from one payer. Usually, you claim the tax-free threshold from the payer who pays you the highest salary or wage. You may receive your income from 2 or more payers at the same time, if you:
Second job or payerWhere you have more than one payer and expect to earn above $18,200 from all sources, you should advise your other payers to withhold tax from your income at a higher rate. This is the 'no tax-free threshold' rate. You will need to complete and lodge a PAYG withholding variation application. Your request should be in writing but you can send it as an email request, a paper or online form. Doing this reduces the chance of you having a tax debt (tax bill) at the end of the income year. See, Why you may receive a tax bill. Change of job during the income yearIf you change jobs during the income year your previous employer stops paying you. This means you will no longer be claiming the tax-free threshold from them. You can claim the tax-free threshold from your new payer even if you have claimed it from your previous employer. To choose whether to claim the tax-free threshold from your new employer complete a tax file number (TFN) declaration. Your payer will work out how much tax to withhold from their payments to you. We will work out your total tax payable at the end of the income year when you lodge your tax return. Example: changing jobsHamid has just completed his university degree and has found a job as a graduate in the public service. During December and January Hamid keeps working at his part time job in a café until he starts in a graduate position in February. He has claimed the tax-free threshold from his café job from July to January. When he quits his café job and starts his graduate position he claims the tax-free threshold from his new employer from February. End of example Tax withheld from all income sourcesWhen you lodge your tax return we assess all the income you earn and the tax withheld amount. Sometimes the total tax withheld may be more or less than the amount you need to meet your end-of-year tax liability, if:
Depending on your circumstances, you can request a change to the amounts of tax withheld from your income. This will help you to match your end-of-year tax liability more closely. If your income is $18,200 or lessIf you're certain your total income for the income year 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. The withholding declaration will advise them you want to stop claiming the tax-free threshold from that payer. Example: income of $18,200 or lessDuring the 2023–24 income year Jeff has a:
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, $64 per fortnight would be withheld. Assuming that Jeff doesn't have other income, his taxable income for the income year will be $18,000. His tax payable at the end of the income year would be nil ($0). He would receive a refund of the total tax withheld when he lodges his 2024 income tax return. If Jeff expects to receive the 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. He can do this by completing a withholding declaration and providing it to his employer. End of example If too much tax is withheldIf 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. Your request should be in writing but you can send it as an email request, a paper or online form. When we receive your application, we'll calculate the variation 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 yearSue has 2 jobs during the 2023–24 income year. As a part-time retail sales assistant, she earns $615.38 per fortnight ($16,000 for the income year). She also works in a restaurant earning on average $384.62 per fortnight ($10,000 for the income 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, $82 per fortnight is being withheld. In total $2,132 was withheld for the income 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 $26,000 Income tax payable on $26,000 $1,482 Less, Low income tax offset $700 Plus, Medicare levy $0 Total tax and Medicare levy $782 Credit for total tax withheld $2,132 Tax refund due to Sue $1,350 The tax refund of $1,350 arises because too much tax was withheld from Sue's income from her employers during the income year. If this situation is likely to continue, Sue can apply to us for a withholding variation to reduce the amounts of tax withheld. So, Sue will receive extra net pay during the income year, rather than receiving a large tax refund at the end of the income year. End of example If too little tax is withheldSometimes 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. You will need to complete and lodge a PAYG withholding variation application. Your request should be in writing but you can send it as an email request, a paper or online form. Example: too little tax withheldPierre receives a taxable pension and has a part-time job. Over the course of the 2023–24 income year, he receives:
Income type Taxable annual income Fortnightly income Fortnightly tax withheld Pension $30,000 $1,153.84 $106.00 Part-time job $30,000 $1,153.84 $272.00 Total $60,000 $2,307.68 $378.00 At the end of the income year, the total tax withheld from Pierre's income will be $9,828 ($378 × 26). When Pierre lodges his tax return for the income 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 $9,967 Less, Low income tax offset $100 Plus, Medicare levy (2% of $60,000) $1,200 Total tax and Medicare levy $11,067 Credit for total tax withheld $9,828 Tax payable $1,239 Pierre will have a tax debt of $1,239 as insufficient tax was withheld during the income 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. |