Picking up a second job, holding multiple part-time roles, or doing gig work is now part of everyday life. But the way tax is withheld across multiple payers can lead to a surprise when you lodge your tax return.
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As an Australian resident for tax purposes, you’re generally entitled to the $18,200 tax-free threshold. This is income on all sources, including income from employers, taxable government payments, sole trader or contractor work under an Australian Business Number (ABN), gig work and some investment income.
If you have more than one payer or employer at a time, you can generally only claim the tax-free threshold from one payer. Usually, this is the payer who pays you the highest salary or wage.
However, a common mistake is claiming the tax-free threshold from every employer or payer. This means that at tax time, the combine tax withheld will likely be not enough for your combined income and you may receive a tax bill.
If you have more than one job and expect to earn more than $18,200 in total income, you should ask your other employers or payers to withhold tax at the higher “no tax-free threshold” rate.
If you drive for a ride-share platform, deliver food, earn gig economy income, rent out assets or run a side business, tax may not be automatically withheld from this income.
If you’re eligible, voluntary pay as you go (PAYG) instalments or tax prepayments can help you prepay your tax in manageable chunks throughout the year. If PAYG instalments are not available or suitable for you, set aside a portion of your income in advance to help meet your liabilities.
Extra care is needed if you have a study or training support loan (e.g. HECS/HELP) as compulsory repayments are based on your total repayment income. Tell each employer or payer about your loan so they withhold the right amounts.
