New Zealand markets close in 5 hours 20 minutes
  • NZX 50

    -96.15 (-0.81%)

    -0.0009 (-0.14%)

    -23.40 (-0.32%)
  • OIL

    +0.23 (+0.25%)
  • GOLD

    +0.50 (+0.03%)

Got a second job or side hustle? Here’s why you’ll pay more tax

·Personal Finance Editor
·2-min read
Australian ATO tax return forms and a man holding Aussie $50 notes
Aussies can't claim the tax-free threshold for multiple jobs is they earn over $18,200. (Source: Getty)

Many Aussies took on a second job or picked up a side hustle after COVID-19 upended the jobs market.

But did you know that you can only claim the tax-free threshold for one job?

If you’re an Australian resident for tax purposes, you don’t have to pay tax on the first $18,200 you earn each year, the Australian Taxation Office (ATO) said.

“We call this the ‘tax-free threshold’, which you should generally only claim from one employer at a time,” it said.

This means that it may feel as though you are paying more tax on one job than another.

“You don’t pay extra tax for having a second job,” the ATO said.

“You pay the same amount of tax whether you earn $1,000 a week through having a single job or multiple jobs.

“When you do your tax return, we add all your income together and calculate the tax you need to pay based on your combined income.”

So, if you’re already claiming the tax-free threshold from your first employer and you get a second job or source of income, you shouldn’t claim it again.

Your first employer won’t withhold tax from the first $18,200 you earn each year. However, your second employer will withhold tax from the first dollar you earn.

“This is why it can feel like you’re paying more tax on your second job,” the ATO said.

What if you don’t earn over $18,200?

The ATO explains that if your total annual income will be less than $18,200, you can claim the tax-free threshold from both jobs.

But, if you do earn more than $18,200, you’ll likely receive a tax bill at the end of the year and owe the ATO money.

Follow Yahoo Finance on Facebook, LinkedIn, Instagram and Twitter, and subscribe to the free Fully Briefed daily newsletter.

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting