Employees’ payment options

Employees have both rights and obligations when they are changing jobs.
The Australian Tax Office says that when they leave or change jobs – or take a second job – their rights and obligations may change, just as they would if they moved overseas or if they left the workforce or retired.
While they are working they must pay income tax on payments they receive from their employer which their employer will deduct.
At the end of the financial year employees need to lodge a tax return and may receive a refund after claiming deductible expenses.
Your employer will generally be required to pay super contributions.
When an employee starts a job the employer is required to withhold tax from wages on their behalf and, in most cases, to pay super into your super account.
Employees need to supply their tax file number (TFN) and complete a TFN declaration which the employer uses to work out how much tax to withhold from pay.
Workers are required to pay income tax on their salary and wages, most Centrelink payments, investment income from rent, bank interest or dividends they receive, profits from selling shares or property and income from business.
The amount of income tax and the tax rate they pay depends on circumstances and how much they earn.
The first $18,200 Australian residents earn is tax free, although in some circumstances this is reduced.
For example, if someone earns additional income (for example, from a second job or a taxable pension) their second payer is required to withhold tax at the higher ‘no tax-free threshold’ rate.
If their second payer does not withhold a higher rate of tax this may mean that the employee has a tax debt at the end of the financial year.
However, if they are certain their total income for the year will be less than $18,200 they can claim the tax-free threshold from each payer.
The employee may also need to pay a Medicare levy, generally 2 per cent of their taxable income.
If an employee has an accumulated Higher Education Loan Program (HELP) debt or an accumulated Financial Supplement debt, they need to include this information on their TFN declaration.
Depending on how much the employee earns they may have to make repayments on this debt as part of their income tax payment.
Employees need to lodge a tax return each year.
You may be eligible to claim tax deductions for expenses they directly incur in earning their income.
However, they cannot claim the cost of normal domestic or private expenses.