Tax agents are warning workers to be prepared for a tax debt if they’re earning a wage from two or more employers and haven’t made the correct tax declaration.
The number of Australians who hold two jobs has increased since coronavirus restrictions eased and cost of living pressures increased.
The Australian Bureau of Statistics reported in March 2024 that 6.7 per cent of employed Australians have multiple jobs, an increase of 1.3 per cent from December 2023.
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Tax Accounting Adelaide tax agent, Romeo Caporaso, says there is a risk that having more than one employer can lead to a tax debt at the end of the financial year.
“You can incorrectly fill out your tax file number declaration form, which can lead to not enough tax taken out,” Caporaso said.
“Some of the common mistakes are not advising you have a tertiary (education) debt, and also that you’ve had another job in a year.”
He says people should not claim the tax-free threshold for the workplace that pays them the most.
If they begin a new place of work within 12 months of leaving their initial job, he also recommends going off the tax-free threshold for the new job.
The tax-free threshold allows workers to earn up to $18,200 without paying tax.
An employer would withhold tax when you earnt above $350 per week, $700 per fortnight or $1,517 per month, the Australian Tax Office (ATO) said.
Perks Accountants and Wealth Advisers director of taxation, Neil Oakes, says going off the threshold means an employer is withholding tax at a higher rate.
He says regardless of whether you work the equivalent of full-time or part-time hours between two or more workplaces, you need to opt out of the threshold.
The ATO also advises that people do not claim the threshold if they have a regular part-time job and receive a taxable pension or government allowance.
Working under an ABN as a contractor, sole trader or having another type of business structure means you cannot claim the threshold.
Caporaso says it is a myth that working two jobs is counterproductive because you pay more tax.
“Ultimately, the tax return will equalise the amount of tax paid,” he said.
Workers who realise they haven’t made the correct tax declaration can ask their employer to remove from the threshold or complete a PAYG withholding variation application.
If people end up with a tax debt at the end of the financial year, the tax office has repayment plans — but will charge interest on any amount owing if it is not paid within an expected timeframe.
Caporaso says the ATO may also collect future tax returns if a person’s debt is not paid off on time.