4 Frequently Asked Questions about Tax-Free Thresholds - What to Know
Are you wondering what kind of tax you must pay if you are a permanent resident of Australia? If so, then you’ve probably never heard of a tax-free threshold. A tax-free threshold states that the first $18,200 of the money you make in a year will not have any tax placed on it. Technically, if you earned less than that amount, you do not have to worry about tax at all.
Still a bit confused? Here are some frequently asked questions about the tax-free threshold that we will try to answer:
1. How do I properly claim for the tax-free threshold?
Usually, if you only have a single job, this is not much of a problem, since you will be claiming from that employer. However, if you are working multiple jobs, it is highly recommended that you claim from only the highest paying one. If you claim tax-free thresholds for two or more jobs, you will find that you end up with leftover tax payables that you need to cover. This happens because, while the highest-paying job gets appropriately taxed, the other jobs might be undertaxed, leaving you with tax payables.
2. Why is my tax refund lower?
Generally, your refund will be lower for one reason: your employer has withheld less tax. Because of this, you might have noticed that you’ve received more money than usual from each pay. However, this still means that your refund also reduces in amount.
This can be a real problem, especially if you are working multiple jobs. You might find that, at the end of your financial year, you will see that you still have some leftover tax payable as the tax paid on your income was not enough.
3. How do I stop this from happening?
The best way to stop yourself from having a tax payable at the end of the financial year is to ask one of your employers to deduct more tax to cover the missing amount. To do this, contact the payroll department.
Otherwise, you can also contact an H&R Block tax consultant to help you with the shortfall. Tell them about how much you are earning as well as how much tax you have paid, and they will give you a solution to cover the shortfall. Note that this might not work entirely at the get-go, so continuously working with either the payroll department or an H&R Block tax consultant will help you get closer to covering the leftover tax payable.
4. How do I pay back what I cannot afford?
In some cases, the tax you owe might be something you cannot afford right away. For this, you can look to defer your tax return until the next due date, which is typically the next financial year.
Tax-free threshold, while a blessing to some, can become quite a headache for those who do not properly address it. If you are one of those people and are having trouble with tax-free-threshold-related issues, always feel free to work with a professional, such as an accountant or a tax consultant. With their help, you will be able to figure out what you need to do to cover your tax payables by claiming the right amount.
If you are looking for an accountant in the Gold Coast to help you out in this department, feel free to visit our website and contact us.