Starting a New Job? Claiming the tax-free threshold

When you start a job, your payer (employer) will give you a Tax file number declaration form to complete. Centrelink is also a payer and they will give you this form if you apply for payments.

You tell your payer you want to claim the tax-free threshold by printing X in the Yes box at ‘question 9 - Do you wish to claim the tax-free threshold from this payer?’

You have 28 days to give your payer a completed Tax file number declaration form with your tax file number (TFN) on it or to claim an exemption from quoting a TFN. An exemption may be claimed if you do not earn enough income to pay tax and you are under 18 years of age.

After that time, they must start taking tax out of your pay at a rate of 46.5%.

If you don’t have or have forgotten your TFN, you can indicate on the Tax file number declaration form that you are making an application or enquiry to get your TFN. This will mean your payer will tax you at the normal rates for 28 days.

However, if you have not provided your TFN at the end of the 28 days, they must start taking tax out of your pay at a rate of 46.5%.

What if you have more than one payer?

You cannot claim the tax-free threshold from more than one payer at a time. If you do, it will result in you not paying enough tax for the income year. This may result in a large tax bill when you lodge your tax return.

If you have more than one payer, you need to choose which one to claim the tax-free threshold from. Generally, it is best to claim the threshold from the payer who pays you the most.

You have more than one payer if:

• you have a part-time job and also receive Centrelink payments, or
• you have two (or more) jobs.

Once you have selected the payer you want to claim the tax-free threshold from, print X in the No box at question 9 with your other payers.

If your circumstances change, you can fill out new Tax file number declaration to ensure you continue to claim the tax-free threshold from the payer who pays you the most. However you must always make certain that you are not claiming the tax-free threshold from more than one payer at a time otherwise you may end up with a tax debt at the end of the income year.

© Commonwealth of Australia. Source: Australian Taxation Office