Do You Get Taxed More on a Second Job in Australia?
Published on May 30, 2023
Financial security – it’s one of the things that a lot of people refuse to let go of; it’s also why many Australians opt for a second job.
So do you get taxed more on a second job in Australia? Not exactly, but there are considerations to be aware of. You’ll likely pay more tax on a second job due to the application of the tax-free threshold usually to your first job, as well as the progressive tax rates that may place you in a higher bracket with your combined income.
How Much Tax Do I Pay on a Second Job? – Tax-Free
Threshold
The tax-free threshold is the first $18,200 of your income that you don’t pay tax on. This allowance is typically applied to your first job, where your income tax is calculated after excluding this amount. This threshold is equivalent to earning $350 a week, $700 a fortnight, or $1,517 a month.
For a second job, however, things are a bit different. Keep in mind that you can only claim the tax-free threshold from one employer at a time (usually your primary job). So for your second job, tax is deducted from the first dollar you earn, with no tax-free threshold.
The amount of tax paid is then contingent on your income bracket. Australia follows a progressive tax system – meaning tax rates increase as your earnings increase. For example, let’s say your first job earns you $60,000 per year and your second job earns $20,000. The first $18,200 of your first job’s income is tax-free. The remainder is taxed at progressive rates.
The income from your second job would be taxed from the first dollar earned and likely at a higher rate due to your combined income placing you in a higher tax bracket. Simply put, it can seem like you pay more taxes in your second job, but this is only due to the tax-free threshold.
Pro tip
Consult with a tax professional or the Australian Tax Office (ATO) for personalised financial advice.
Related articles: How Do Tax Returns Work?
Is Working 2 Jobs Worth It?
The decision to work two jobs in Australia – or indeed anywhere – isn’t one to be made lightly. It entails a significant time commitment and unwavering desire to succeed.
In evaluating the worth of holding two jobs, you first need to consider the financial benefit. With the higher tax rates on the second job, will the additional net income be worth the extra hours you are putting in? For instance, if you’re moving into a higher tax bracket with the added income from the second job, you might find that a significant portion of your earnings goes towards tax, reducing the financial benefit.
Next, consider the non-financial aspects. Two jobs mean less leisure time and potentially higher stress levels. Can you handle the increased workload without it negatively affecting your quality of life? Will the second job interfere with your primary job? You need to find a balance to prevent burnout or performance compromise at either job.
But the thing is, the value of a second job isn’t always purely monetary. It can be purely subjective. Perhaps the second job offers you an opportunity to gain new skills or experience in an area you’re passionate about. It might be a stepping stone to a career shift or a chance to broaden your professional network. Whatever your purpose is, I hope it opens more doors for personal fulfilment.
Let’s Make It Worth It
You may or may not get taxed on a second job in Australia. This largely depends on your individual circumstances, including your tax bracket and the application of the tax-free threshold. But bear in mind that the decision of whether or not it’s worth it to have a second job extends beyond simple dollars and cents; it includes considerations of your quality of life, career aspirations, and personal satisfaction.
Should you find yourself grappling with these questions, professional financial advice can be invaluable. At The Bookkeeping Studio, we offer more than just number crunching. We provide a personalised approach to understanding your situation and guide you to make the most informed decisions. While you’re preoccupied with considering a second job, we’ll always make you feel like a first choice. Learn more about your tax obligations today.
Hey, my name’s Bindi Gethen! I’m the founder of The Bookkeeping Studio in Australia. With over 15 years of experience in the industry, I have a deep understanding of the challenges that small and medium-sized business owners face when it comes to managing their finances.
I am passionate about empowering my clients with the financial information they need to succeed. My team and I pride ourselves on our commitment to exceptional value, accuracy, and confidentiality. Our virtual bookkeeping services include payroll, budgets, and management reporting, among others.
Not to toot our own horn, but we can assure you that you won’t find a bookkeeping partner like us anywhere else in the Southern Highlands.
