I think there is a lot of misinformation about how our income tax works here in Australia, especially regarding having a second job. Now, I don’t have a complete understanding of how it all works (who does) but having spent a few weeks on it in High School with my favourite Maths teacher, Ms Broadbent I don’t think people should be so worried about it. My point is this, most people think that if they have a second job, the government rips them off by taxing them at 49.5%. Little do they know that that is the rate that PAYG is taken out, but not necessarily the rate you will be taxed at the end of financial year. In fact, it probably will not be the rate you are taxed at.

This is due to the fact that the amount of tax you pay is assessed on your entire taxable income (Income, less deductions) and the rate you pay on each dollar changes according to the tax brackets. Basically what this all means, is those extra dollars you are paying each week for your second job, will be coming back to you at tax return time. I was going to write a conceited example and run the figures, but instead use the tax calculator at the ATO website and note that it does not take into account how many jobs you had, only the amount of money you have earnt and the length of time you lived in Australia.

Another point where a lack of education seems to happen is surrounding HECS (now called HELP) repayments. I was under the impression that it had a “Tax Free Threshold”, however it does not. When you reach the minimum wage earned, (currently $36,185) they take a %4 cut of your entire wage. Basically the day you get the pay rise to take you over that threshold, you are going to take quite a pay cut. Again, it is probably easiest to have a look at the ATO’s HELP calculator.