How Much Tax Should You Be Paying?

Nov 19, 2020

I work two different part time jobs. Do I have to pay a higher rate of tax on my second job?
No, you don’t pay extra tax for having a second job. You will pay the same amount of tax on your income whether you have one single job or multiple jobs.  So if you earn $1000 a week from a single employer, or from multiple employers, the tax you need to pay will be the same. At the end of the year when you do your income tax return, all of your income will be added together and the ATO will calculate the tax you need to pay based on your combined income.
You can use the ATO’s online tax withheld calculator to find out how much tax should be withheld on our income.
 
Why does it feel like I pay more tax on my second job than my first job?
You will end up paying the same tax on your income irrelevant if you earn it through one employer or many. At the end of the year when you do your income tax return, all of your income will be added together and the ATO will calculate your tax liability based on your combined income as a lump sum.  The reason it might feel like you pay more tax on one job than the other could be because of the tax free threshold.

Basically, Australian residents for tax purposes receive the first $18,200 they earn tax free each year.  This is known as the tax free threshold and equates to receiving the first $350 a week or $700 a fortnight income tax free from your employer.

You can only claim this from one employer at a time which means you cannot claim this from a second or subsequent employer.  If you did, it would be double dipping and you would end up getting two tax free thresholds and probably a tax bill at the end of the year. If you're certain your total annual income from all employers or payers will be less than $18,200 you can claim the tax-free threshold from each payer. Read more information about claiming the tax free threshold.
As you don't claim the tax free threshold from your second employer, any income you receive from them will be taxed from the first dollar – you won’t receive any amount tax free amount from this employer.  This might be why it feels  like you are paying more tax on a second job.
 
What if I have changed jobs during the financial year. Can I still claim the tax free threshold?
Yes, you can change which employer you claim the tax free threshold from at any time. As long as you ensure you are only claiming it from one employer at a time, it will be fine.

You can claim the tax free threshold from one employer at a time, so if you change employers you will stop claiming it from the employer you left and you can chose to claim from your new employer instead.   

If you stop working for an employer, you do not need to formally end claiming the tax free threshold with them – when they stop paying you they will stop giving you any tax free amounts as you are no longer earning income from them.  When you commence work with your new employer, you will fill out a new tax file number declaration and you can select ‘yes’ to the tax free threshold to claim it through your new employer. There is no limit to how many times you can change your tax free threshold, as long as you are only claiming it through one employer at a time.

 

Source: Australia Taxation Office