Applying for a new job and not sure which box to tick?
The tax-free threshold can be confusing, so let’s break it down.
What is the threshold?
The threshold currently sits at $18,200 and is the amount of income on which tax does not apply. Meaning the first $18,200 of your total taxable income is not subject to income tax. If you earn less than $18,200 in a financial year, you will receive a full refund of any tax you have paid.
How do I claim it?
Claiming the tax-free threshold is done when you complete your Tax File Number Declaration, which your employer will give to you when you start a new job.
Is it compulsory to claim the tax-free threshold?
No, it is not compulsory, but it is recommended if you only have ONE job. This means you will get more in your pocket with each pay but should still be taxed the appropriate amount.
If you have TWO or more jobs, it is recommended that you claim the tax-free threshold on the highest paying job and claim the no-tax-free threshold with any additional jobs. This means only one employer is accounting for that $18,200 of tax-free income and you shouldn’t end up with a bill at tax time. *
If you’re not sure which box to tick, give us a call, and we can guide you through it.
*Disclaimer: Even when using this method, some taxpayers may be subject to paying tax after lodging their tax return as individual circumstances influence tax results.
Get in touch with the PLH Accountants team today for more information about the tax-free threshold