You’ve got multiple jobs, your bank account is looking healthier, but then tax time rolls around, and suddenly—you owe money to the ATO. Sound familiar? If you’re working more than one job and haven’t thought about how you’re claiming the tax-free threshold, you could be in for a nasty surprise.
What Is the Tax-Free Threshold?
In Australia, you do not pay tax on the first $18,200 you earn in a financial year. This is called the tax-free threshold. If you have just one job, your employer will not take tax out of your pay until your earnings go beyond this amount. Simple, right?
But what happens when you have two or more jobs? That is where things can get tricky.
Should You Claim the Tax-Free Threshold From More Than One Job?
Short answer: Usually, no.
If you have multiple jobs at the same time, you should generally claim the tax-free threshold from only one of them—the job that pays you the most. This ensures that enough tax is taken from your other jobs so you don’t end up with a tax bill at the end of the year.
If you claim the tax-free threshold from multiple jobs, each employer assumes you’re only working for them and doesn’t withhold enough tax.
At the end of the financial year, the ATO adds up all your earnings and works out what you should have paid. If you have underpaid, you’ll have to make up the difference, which could mean a big bill you weren’t expecting.
When Should You Claim the Tax-Free Threshold From More Than One Job?
There’s one exception: if you’re absolutely certain that your total income across all your jobs will be $18,200 or less for the entire year, you can claim the tax-free threshold from each employer. But let’s be real—if you’re juggling multiple jobs, chances are you’re earning more than that.
If your income starts out below $18,200 but increases later in the year, you’ll need to update your tax details with one of your employers to stop claiming the tax-free threshold. Otherwise, you could be caught off guard by an unexpected tax debt.
How to Fix It If You’re Paying Too Little Tax
If you realise you’ve claimed the tax-free threshold from multiple jobs and might not be paying enough tax, don’t panic. You can ask one of your employers to withhold extra tax from your pay to cover the shortfall.
To do this, you’ll need to complete a PAYG withholding variation form, which lets the ATO adjust how much tax is taken from your wages. This can help you avoid a tax bill and the stress that comes with it.
What If You’re Paying Too Much Tax?
On the flip side, if too much tax is being withheld because you’re not claiming the tax-free threshold at all, you’ll likely get a tax refund when you lodge your return. While this might seem like a nice surprise, it also means you’ve been giving the ATO an interest-free loan all year—money that could have been sitting in your pocket instead.
If you think you’re paying too much tax, you can submit a PAYG withholding variation to adjust it. Just make sure you’re confident about your expected income for the year before making any changes.
What About Changing Jobs?
If you switch jobs during the year, your old employer stops paying you, meaning they no longer withhold tax. In this case, you can claim the tax-free threshold from your new job, even if you already claimed it at your previous one.
When starting a new job, you’ll be asked to complete a Tax File Number (TFN) declaration. This is where you choose whether to claim the tax-free threshold. If it’s your only job, go ahead and claim it. If you’re working multiple jobs, make sure you’re only claiming it from one employer.
The Bottom Line
Getting your tax withholding right when you have multiple jobs isn’t just about avoiding a tax bill—it’s about taking control of your finances. If you claim the tax-free threshold incorrectly, you could end up paying too little tax and owing money to the ATO. On the other hand, if you’re paying too much, you’re losing access to your hard-earned cash throughout the year.
Not sure if you’ve got it right? Check your payslips, review your tax details with your employers, and if in doubt, speak to the ATO or a tax professional. A little effort now can save you a big headache at tax time.
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