Working two jobs is common in Australia, especially if you are combining part-time, casual or seasonal work. The problem usually starts when the tax-free threshold is accidentally claimed from both employers. It is a very common payroll mistake, but it can create an unpleasant surprise at tax time because not enough tax may have been withheld across the year. The ATO says you should generally only claim the tax-free threshold from one employer, usually the one paying you the most.
Many people think the issue is about having two jobs. It is not. The real issue is how much tax each employer withholds.
Each employer only sees the wages they pay you. They do not automatically calculate tax based on your total income from all jobs. So if you claim the tax-free threshold from both employers, each one may withhold less tax than they should. That can leave you short when your annual tax return combines both incomes into one total. The ATO specifically flags this as a common issue for people with multiple jobs or other income sources.
For most Australian residents, the tax-free threshold means the first $18,200 of taxable income is not taxed. Claiming it through payroll reduces the amount of tax withheld from your wages during the year. That is helpful when you have one main employer, but it can cause under-withholding if you claim it more than once while your combined income goes over the threshold.
Usually, nothing dramatic happens straight away. Your employers keep paying you, and your payslips may look normal. The issue shows up later when you lodge your tax return.
At that point, the ATO looks at your total income for the full financial year, not each job separately. It compares your combined income with the tax already withheld. If too little tax was withheld because both employers applied the tax-free threshold, you may end up with a tax bill instead of a refund.
In most cases, this is a mistake rather than misconduct. It does not automatically mean penalties or serious ATO action. The more common outcome is simply that your assessment shows you still owe tax. In other words, the problem is usually a cash-flow shock at tax time, not a compliance disaster. That follows from the ATO’s explanation that tax is reconciled through your return using your total income and total withholding.
he usual rule is to claim it from the employer who pays you the highest salary or wage. That generally gives the most accurate withholding result over the year. If you change jobs and stop being paid by your old employer, you can then claim the threshold from the new one instead
Sometimes, yes. If your total income from all jobs for the year will stay under $18,200, claiming the threshold from more than one payer may still be acceptable. But once your combined income is likely to exceed that amount, claiming it twice can create a shortfall.
magine you work two casual jobs. One pays you three days a week and the other pays you weekends. If you claim the tax-free threshold from both, each employer may withhold tax as though part of your wages falls within your tax-free amount. But your tax return does not treat those jobs separately. It adds them together.
That is why someone can feel as though both jobs were “taxed correctly” during the year and still owe money when they lodge. The problem is not the payslip itself. The problem is that both employers were using the same tax-free benefit at the same time. This is an inference from the ATO’s multiple-income withholding rules.
If you claimed the tax-free threshold from two jobs, the good news is that it can usually be fixed. The main goal is to make sure the right amount of tax is withheld for the rest of the year so you reduce the chance of a tax bill when you lodge your return. The ATO says that if you have more than one job at the same time, you should generally only claim the tax-free threshold from one employer, usually the one paying you the highest salary or wage
The first and most important step is to correct which job is using the tax-free threshold. In most cases, you should keep it with your main or higher-paying job and remove it from the second job. The ATO says employees can update their withholding details using the relevant declaration process when their circumstances change
If part of the year has already passed and you think too little tax has been withheld, you can ask your employer to take out extra tax from future pay runs. The ATO allows a payee to request an increase in the amount withheld, which can help cover any likely shortfall before tax time
If your income has changed during the year, your original setup may no longer be the best one. For example, if your second job now pays more than your first, it may make sense to switch the tax-free threshold to that job instead. The ATO’s guidance for multiple jobs focuses on claiming the threshold from the payer giving you the highest income.
A practical step is to compare your year-to-date gross income and tax withheld across both jobs. This helps you work out whether the issue is small or whether you may need extra withholding before 30 June. The ATO explains that multiple-job problems usually arise because not enough tax is withheld overall, rather than because the income itself is wrong.
Where appropriate, you may be able to request a variation or adjustment to the amount withheld so your PAYG withholding better matches your likely year-end tax position. The ATO provides for withholding variations and withholding declarations to change how much tax is taken from future payments.
If the mistake is discovered late in the financial year, there may not be enough pay cycles left to fully correct it through payroll. In that case, a sensible option is to start setting money aside so you are prepared if your tax return results in an amount payable. This is a practical inference from the ATO’s explanation that the final position is reconciled through your tax return using total income and total withholding.
If you have had two jobs, changing hours, overlapping employment or other income, it can help to have your tax position reviewed before you lodge. That way, you can estimate whether you are likely to receive a refund or face a bill, and you can plan for it early. This is especially useful where the mistake went on for several months
Even a short overlap can matter. If you claimed the threshold from two jobs for only a few months, the impact may be smaller, but it can still affect your final tax result. Your assessment is based on the whole financial year, so even temporary under-withholding can still show up at tax time
If you are worried you may have claimed the tax-free threshold incorrectly, an accountant can review your income statements, payslips and estimated taxable income before you lodge. That can help you work out whether you are likely to receive a refund, break even, or face a tax bill. It can also help you adjust withholding before the end of the year instead of being caught off guard later. This is a practical step based on the ATO’s rules for multiple jobs and withholding.
Claiming the tax-free threshold from two jobs is a common mistake, especially when work arrangements change quickly or when someone starts a second casual role. In most cases, the result is simple: not enough tax gets withheld, and that can lead to money owing on your tax return. The best approach is to correct the withholding early, claim the threshold from only one main employer, and keep an eye on your total income across the year
Usually, it means too little tax may have been withheld during the year, which can leave you with tax to pay when you lodge your return.
Usually the employer paying you the highest salary or wage.
Yes. You can update your withholding setup so only one employer applies the tax-free threshold and, if needed, arrange extra withholding to reduce any shortfall.
