Income from more than one job
Your income may be from one or more payers, such as an employer or government agency or work you do under an ABN. Claiming the tax-free threshold ($18,200) reduces the amount of tax withheld from your income.
How to claim the tax-free threshold
You can usually claim the tax-free threshold on the first $18,200 of income you earn in the income year. This is called the tax-free threshold.
If you’re an Australian resident for tax purposes you can claim the tax-free threshold each income year.
You can choose to claim or not claim the tax-free threshold on the TFN declaration you give to your payer (including Centrelink).
If you choose to do so:
you will not pay tax where your income is under $18,200
your payer will withhold tax when you earn above $18,200.
The tax-free threshold is equivalent to earning:
$350 a week
$700 a fortnight
$1,517 a month.
When to claim the tax-free threshold
If 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:
have a second job or more than 2 jobs
have a regular part time job and also receive a taxable pension or government allowance
are working under an ABN as a contractor, sole trader or other business structure.
You should also check the tax and super obligations you have as a contractor compared to employees.
Where you have more than one payer, you should advise your other payers to withhold tax from your income at a higher rate. This is the ‘no tax-free threshold’ rate. Doing this reduces the chance of you having a tax debt at the end of the income year.
Sometimes the total tax withheld from all sources may be more or less than the amount you need to meet your end-of-year tax liability. When you lodge your income tax return we assess the tax withheld amount and if:
too much tax was withheld, it may result in a tax refund
you have not had enough tax withheld, you may receive a tax bill to pay the difference.
Depending on your circumstances, you can request a change to the amounts of tax withheld from your income. This will help you to more closely match your end-of-year tax liability.
If your income is $18,200 or less
If 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 less
During the 2021-22 income year Jeff has a:
taxable pension of $384.61 per fortnight ($10,000 for the income year)
part-time job earning $307.69 per fortnight ($8,000 for the year).
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 2022 income tax return.
If Jeff expects to receive 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 your income is over $18,200 and too much tax is withheld
If 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 with us.
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 year
Sue has 2 jobs during the 2021–22 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
Less, Low and middle income tax offset
$675
Plus, Medicare levy
$263.50
Total tax and Medicare levy
$370.50
Credit for total tax withheld
$2,132.00
Tax refund due to Sue
$1,921.50
The tax refund of $1,921.50 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 withheld
Sometimes 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. Your request should be in writing but can be in any format. You can send an email request, a paper or computer-based form.
Example: too little tax withheld
Pierre receives a taxable pension and has a part-time job. Over the course of the 2021–22 income year, he receives:
$30,000 from the pension – Pierre’s payer applies the Medicare levy and tax-free threshold to his fortnightly payments
$30,000 from the part-time job – Pierre’s employer applies the Medicare levy and no tax-free threshold to his fortnightly payments.
Pierre’s tax withheld is:Income typeTaxable annual incomeFortnightly incomeFortnightly tax withheldPension
$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
Less, Low and middle income tax offset
$1,500
Plus, Medicare levy (2% of $60,000)
$1,200
Total tax and Medicare levy
$9,987
Credit for total tax withheld
$9,828
Tax payable
$159
Pierre will have a tax debt of $159 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.
End of example
If you are an Australian resident for part of the year
If you are an Australian resident for tax purposes during the income year, you will receive a part-year tax-free threshold.
The part year tax-free threshold has 2 components:
a flat amount of $13,464
an additional $4,736 – we work on the number of months you were in Australia during the income year, including the month you arrived.
If you’re a non-resident for the full income year, you can’t claim the tax-free threshold. This means you pay tax on every dollar of income you earn in Australia. Find out about the Tax-free threshold for newcomers to Australia.
Australian Taxation Office
(ATO)