If you don't claim the tax-free threshold, you'll have to pay tax on your entire earnings regardless of how much money you make (yep even if it's less than $18,200).
The tax-free threshold ($18,200 at 1 July 2019) is the amount of income you can earn each financial year that is not taxed. By claiming the threshold, you reduce the amount of tax that is withheld from your pay during the year.
Your tax-free Personal AllowanceThe standard Personal Allowance is £12,500, which is the amount of income you do not have to pay tax on. Your Personal Allowance may be bigger if you claim Marriage Allowance or Blind Person's Allowance. It's smaller if your income is over £100,000.
Income Tax on second jobsIf you're working, you are entitled to earn a certain amount of money without paying Income Tax. This is called the Personal Allowance and is £12,500 for the 2020/21 tax year.
Resident tax rates 2020–21
| Taxable income | Tax on this income |
|---|
| 0 – $18,200 | Nil |
| $18,201 – $45,000 | 19 cents for each $1 over $18,200 |
| $45,001 – $120,000 | $5,092 plus 32.5 cents for each $1 over $45,000 |
| $120,001 – $180,000 | $29,467 plus 37 cents for each $1 over $120,000 |
The tax-free threshold is $18,200. If you're an Australian resident for tax purposes, the first $18,200 of your yearly income isn't taxed. You can claim the tax-free threshold to reduce the amount of tax that is withheld from your pay during the year.
The tax year runs from 6 April to 5 April, and for the 2020-21 tax year the standard Personal Allowance is £12,500 and then indexed with the Consumer Price Index (CPI) from then onwards. If you earn less than this, you normally shouldn't have to pay any Income Tax.
Income tax slab rate applicable for New Tax regime – FY 2020-21.
| Income Tax Slab | New Regime Income Tax Slab Rates for FY 2020-21 (Applicable for All Individuals & HUF) |
|---|
| Rs. 5.00 lakhs- Rs 7.5 Lakhs | 10% |
| Rs 7.5 lakhs – Rs 10.00 Lakhs | 15% |
| Rs 10.00 lakhs – Rs. 12.50 Lakhs | 20% |
| Rs. 12.5 lakhs- Rs. 15.00 Lakhs | 25% |
It's never too early to start thinking about your next tax return. The 2020 tax rates themselves are the same as the rates in effect for the 2019 tax year: 10%, 12%, 22%, 24%, 32%, 35% and 37%. However, as they are every year, the 2020 tax brackets were adjusted to account for inflation.
If you make $50,000 a year living in Australia, you will be taxed $8,797. That means that your net pay will be $41,203 per year, or $3,434 per month. Your average tax rate is 17.6% and your marginal tax rate is 34.5%.
If you're single, your total rebate income must be less than $32,279 for the financial year to be eligible for the maximum SAPTO of $2,230. The SAPTO progressively reduces by 12.5 cents for every dollar over this amount, up to a rebate income level of $50,119 (where the offset cuts off completely).
If you have more than one job and your combined income exceeds $18,200, you can only claim the tax-free threshold for one of those jobs (normally the higher paying one). If you claim for both jobs, not enough tax will be deducted and you will have a tax debt at the end of the year, when you lodge your tax return.
Your Second Job Implications
| Taxable Income | Tax Rate |
|---|
| $0 – $18,200 | Nil |
| $18,201 – $37,000 | 19% |
| $37,001 – $80,000* | 32.5% |
| $80,001 – $180,000 | 37% |
The tax on a second job is often paid through a BR tax code. BR stands for Basic Rate, which is set at 20%. However, it is possible that your extra income could push your total earnings for a year into a higher tax bracket (if earning over £46,351) – meaning you may have to pay more tax.
If you earned less than $18,200 AND you didn't pay any tax on this income, then you may not be required to lodge a tax return this year. However, you may still need to lodge a tax return if you: are entitled to the private health insurance rebate. had a reportable fringe benefits amount on your PAYG Summary.
