Juggling Multiple Jobs? How to Avoid a Tax Time Surprise
More Australians than ever are earning income from multiple jobs, side hustles, gig work, or freelance contracts. While these extra income streams can boost your finances, they can also increase the risk of an unexpected tax bill when you lodge your tax return.
Understanding how tax works across multiple income sources can help you avoid unpleasant surprises at tax time and stay on top of your tax obligations.
Understanding the Tax-Free Threshold
If you’re an Australian resident for tax purposes, you’re generally entitled to the $18,200 tax-free threshold. This means you can earn up to $18,200 each financial year before paying income tax.
Your total taxable income may include:
- Wages and salary from employment
- Taxable government payments
- Sole trader or contractor income earned under an Australian Business Number (ABN)
- Gig economy earnings
- Investment income
- Rental income
The Australian Taxation Office (ATO) assesses your overall income across all sources when calculating how much tax you owe.
Claim the Tax-Free Threshold Correctly
If you have more than one employer or payer, you can generally only claim the tax-free threshold from one of them.
In most cases, you should claim it from the employer or payer that provides your highest income. The exception is when you’re confident your combined income from all sources will remain below $18,200 for the financial year.
A common mistake is claiming the tax-free threshold from every employer or payer.
When this happens, each payer calculates tax withholding as though you’re only earning income from them. As a result, not enough tax may be withheld throughout the year, potentially leaving you with a tax bill when you lodge your tax return.
Working Multiple Jobs?
If you expect your total income to exceed $18,200, ask your secondary employers or payers to withhold tax at the “no tax-free threshold” rate. This simple step can significantly reduce the likelihood of owing additional tax at year-end.
Gig Work and Side Hustles Require Extra Planning
Many people now supplement their income through ride-share services, food delivery apps, freelance work, online marketplaces, or small businesses.
Unlike traditional employment, tax is often not automatically withheld from gig economy earnings or self-employment income.
This means you may need to manage your own tax obligations throughout the year.
Common examples include:
- Ride-share driving
- Food delivery services
- Freelance or contractor work
- Online content creation
- Renting out assets or equipment
- Small business activities
If tax isn’t withheld from these income streams, you could face a larger tax liability when it’s time to lodge your return.
Consider PAYG Instalments
One way to avoid a significant tax bill is through Pay As You Go (PAYG) instalments.
If eligible, PAYG instalments allow you to prepay your expected tax in smaller, manageable amounts throughout the year rather than paying a lump sum after lodging your return.
This approach can help improve cash flow management and reduce the stress of unexpected tax liabilities.
PAYG instalments may also help cover additional obligations such as:
- The Medicare levy
- HECS/HELP repayment requirements
- Other compulsory government charges
If PAYG instalments aren’t suitable for your situation, consider regularly setting aside a portion of your income in a separate savings account to cover future tax obligations.
Don’t Forget About Your HECS/HELP Debt
If you have a HECS-HELP, VET Student Loan, or other study and training support loan, earning income from multiple sources can affect your compulsory repayments.
Many people assume repayments are calculated based only on their main salary. However, repayment obligations are based on your total repayment income, which may include:
- Additional employment income
- Self-employment earnings
- Side hustle income
- Investment returns
- Rental income
As your total income increases, your compulsory loan repayment may also rise.
To avoid an unexpected debt at tax time, notify each employer or payer that you have a study or training support loan. This allows the correct amount of tax to be withheld throughout the year.
The Bottom Line
Working multiple jobs or earning additional income can provide valuable financial flexibility, but it can also create tax complications if you don’t plan ahead.
Claim the tax-free threshold correctly, keep track of all income sources, and consider PAYG instalments if tax isn’t automatically withheld. If you have a HECS/HELP debt, remember that your repayment obligations are based on your total income, not just your primary job.
Taking a proactive approach throughout the year can help you avoid a surprise tax bill and make tax time much less stressful.
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Important: Clients should not act solely on the basis of the material contained here. Items herein are general comments only and do not constitute or convey advice per se. Also, changes in legislation may occur quickly. We, therefore, recommend that our formal advice be sought before acting in any of the areas.
