Whether you’re working a second job, juggling multiple part-time roles, driving for a rideshare service, or earning extra income through a side hustle, having multiple income streams has become increasingly common.
While earning more income is a positive step, it’s important to understand how Australia’s tax system works. Without the right planning, many people are surprised to receive a tax bill when they lodge their tax return.
The good news is that a little preparation throughout the year can help you avoid unexpected tax obligations.
Understanding the Tax-Free Threshold
As an Australian resident for tax purposes, you’re generally entitled to the $18,200 tax-free threshold. This means you can earn up to this amount during the financial year before paying income tax.
Your total taxable income may include:
- Salary and wages from one or more employers.
- Casual and part-time employment.
- Gig economy income, such as rideshare or food delivery.
- Sole trader or contractor income earned under an ABN.
- Taxable government payments.
- Investment income, including interest and rental income.
It’s your combined income from all sources that determines how much tax you’ll ultimately pay.
Claim the Tax-Free Threshold Correctly
One of the most common mistakes made by taxpayers with multiple jobs is claiming the tax-free threshold from every employer.
In most situations, you should only claim the tax-free threshold from the employer paying your highest salary or wage. Your other employers should withhold tax using the higher “no tax-free threshold” rate.
If every employer applies the tax-free threshold, insufficient tax may be withheld throughout the year. When you lodge your tax return, the Australian Taxation Office (ATO) combines all of your income and calculates the correct amount of tax payable. If not enough tax has been withheld, you may receive an unexpected tax bill.
Side Hustles and Gig Economy Income
Income earned outside traditional employment often doesn’t have tax automatically withheld.
This may include income from:
- Rideshare driving.
- Food delivery services.
- Freelance or contractor work.
- Online businesses.
- Renting out property or other assets.
- Any business operated under an ABN.
Although tax may not be deducted as you earn this income, it’s still generally taxable and must be declared in your annual tax return.
Setting aside a portion of each payment throughout the year can make it much easier to meet your tax obligations when they fall due.
Consider PAYG Instalments
If you regularly earn income that doesn’t have tax withheld, you may be eligible to enter the Pay As You Go (PAYG) instalment system.
Rather than facing a large tax bill at the end of the financial year, PAYG instalments allow you to make smaller tax payments throughout the year, helping you better manage your cash flow.
For many taxpayers with growing side businesses or investment income, this can make budgeting far easier and reduce financial stress at tax time.
Don’t Forget About Your HECS-HELP Loan
If you have a HECS-HELP or other study and training support loan, earning additional income can affect your compulsory repayments.
Many people assume repayments are based only on their primary job, but your repayment obligation is calculated using your total repayment income across all sources.
If you have multiple employers, it’s important to let them know about your study loan so the correct amount of tax is withheld during the year. Failing to do so can result in a larger repayment when your tax return is assessed.
Plan Ahead and Stay in Control
Managing multiple income streams doesn’t have to mean unpleasant surprises at tax time.
By claiming the tax-free threshold correctly, keeping accurate records, setting aside tax from untaxed income and seeking professional advice when needed, you can stay on top of your tax obligations and avoid unexpected bills.
If you’re working multiple jobs, running a side business or earning gig economy income and you’re unsure how it affects your tax position, contact us today. We’ll ensure your tax return is accurate, compliant and structured to minimise surprises while maximising the deductions you’re entitled to claim.