Holding down two jobs? | 2022 Gotax

I WANT TO GET A SECOND JOB, BUT I DON’T WANT TO PAY HALF TO THE TAX MAN!

16th June 2022

We have heard this statement many times over the years, however it is not entirely true.  If you already earn over $180,000 per year then the statement is correct, as this level of income already puts you into the highest tax bracket.

It doesn’t matter how many jobs you are working at the same time, the total tax you pay depends on your total income.  So if your total income for the year is $80,000, you pay the same amount of tax whether it’s from 1 job or 4 jobs.

The problem arises when you work 2 jobs at the same time and claim the tax-free threshold for both jobs.  This means that you are not paying enough tax during the year, and you will end up with a tax bill when you lodge your tax return.

So, you claim the tax free threshold on your main job and don’t claim it for your second, or third, or fourth jobs.  This will help you avoid a tax bill at the end of the year.  However sometimes you can do this and still get a tax bill, the trick is to see what tax bracket your main job puts you in and then make sure your second job is taxed at that rate.

For example, if you earn $50,000 from your first job, this puts you in the 32.5% bracket (plus 2% for the Medicare Levy), so you need to make sure your second job is taxing you at 34.5%.  The tax brackets are as follows:

So you can see if that if your total income stays under $120,000, then the maximum tax rate will only ever be 34.5%.

Start your Tax return now and get it finished on the spot  gotax.com.au