If you are an Australian resident taxpayer, the first $18,200 of income which you receive is tax-free. This is called the tax free threshold.
If you earn less than $18,200 from all sources, you won’t pay tax. You will pay normally pay tax on the excess over $18,200.
The $18,200 tax-free threshold equates to:
• $350 a week
• $700 a fortnight
• $1,517 a month
Taxpayers with two or more income sources – beware of a possible tax trap caused by the tax free threshold.
Some taxpayers with two or more jobs or other taxable income sources may be caught in an unintentional tax trap as a result of the tax free threshold.
The problem occurs even if the taxpayer and the employers do the right thing. The problem is caused as the first job attracts the tax-free threshold while second and subsequent jobs are under taxed. This means that taxpayers can be left with a tax bill at the end of the financial year.