Do You Want To Claim The Tax-Free Threshold From This Payer?

When to claim the tax-free threshold?

If you have multiple payers at the same time, you only claim the tax-free threshold from one payer. Generally, you apply to claim the tax-free threshold from the payer who pays you the highest salary or wage. You may get 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 get a taxable pension or government allowance
  • Are working under an ABN as a sole trader, contractor, or other business structure. 

By opting for Melbourne accounting solutions, you can be sure when to claim the tax-free threshold. 

Second job or payer

If you have multiple payers and intend to earn more than $18,200 from all sources, you need to advise your other payers to withhold tax from your income at a higher rate. This is the ‘no tax-free threshold’ rate. You should complete and file a PAYG withholding variation application. You need to request in writing and send it as an email request, an online form, or a paper form. Doing this can minimise the chance of you having a tax debt at the end of the income year. 

Change of job during the income year

If you change jobs during the income year and your previous payer stops paying you, then you will not be able to claim 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 payer. To choose whether to claim the tax-free threshold from your new employer, you need to complete a tax file number (TFN) declaration. Your employer will check how much tax to withhold from their payments to you. The ATO will check your total tax payable at the end of the income year when you file your tax return. 

How to claim?

You may be receiving income from one or more payers, such as an employer, government agency or work you do under an Australian Business Number. You are eligible to claim the tax-free threshold each income year if you are an Australian resident for tax purposes. You can claim or not claim the tax-free threshold on the tax file number declaration you provide to your payer. If you choose to do so:

  • You won’t pay tax if your income is under $18,200
  • Your payer will withhold tax when you earn more than $18,200. 

You need to understand what you should do if you have more than one job or change jobs during the income year.

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