Having more than one source of income can make your Australian tax return more complicated.You might have a full-time job and a side business, work two jobs, switch from employee to contractor, earn FIFO income or receive money from overseas.
The basic rule is simple: you generally report all relevant income in your individual tax return.
The challenge is making sure each type of income is reported correctly, deductions are allocated properly and enough tax has been paid throughout the year. Here’s what to know if you have multiple income sources.
Do You Need a Separate Tax Return for Each Income Source?
No.
If you have several jobs or income streams, you generally report them in the same individual tax return.
This could include:
- PAYG salary and wages
- ABN or sole trader income
- Investment income
- Rental income
- Government payments
- Foreign income
- Other assessable income
Your total taxable income is then used to determine your overall tax liability.
The important point is that different income sources can have different tax and deduction rules.
Working Two or More Jobs
Having two jobs is one of the most common reasons people end up with an unexpected tax bill.The problem is that each employer generally calculates PAYG withholding based on the income they pay you.They do not necessarily know what you are earning from another employer.
Watch the Tax-Free Threshold
Australian residents can generally claim the tax-free threshold from only one employer at a time. If you claim it from more than one employer while working both jobs, insufficient tax may be withheld during the year.
If you have two jobs at the same time:
- Check which employer is claiming your tax-free threshold.
- Review your PAYG withholding if your circumstances change.
- Consider asking your employer to deduct an additional amount from your pay if required.
PAYG Employment Plus ABN Income
Another common situation is having a regular job while earning extra money as a contractor or sole trader.
For example, you might:
- Work full-time and freelance on weekends
- Consult outside your normal employment
- Drive for a platform
- Run an online business
- Undertake contract work using an ABN
Your employment income and business income are reported in your tax return, but they are treated differently.Your PAYG employer generally withholds tax from your wages.With ABN income, you may receive payments without tax being withheld.This can result in a tax bill at the end of the financial year.
Put Money Aside for Tax
If your ABN clients are not withholding tax, consider putting part of each payment aside to cover your eventual tax liability.
The amount you need will depend on:
- Your total income
- Your deductions
- Your individual circumstances
Do not rely on a fixed percentage, as everyone’s tax position is different.
Keep Business and Employment Deductions Separate
One of the biggest mistakes with multiple income sources is claiming expenses against the wrong type of income.Generally, expenses must have a connection to the income they help you earn.
For example:
- An expense relating solely to your contracting work may be a business deduction.
- An eligible work expense relating to your employment may be a work-related deduction.
- An expense used for both purposes may need to be apportioned.
Keep separate records for your employment and business activities.Do not claim an expense simply because you paid for it while working.The expense must meet the relevant deduction rules and, where required, be supported by records.
Don’t Forget Personal Services Income (PSI)
If your ABN income mainly comes from your personal skills or labour, the Personal Services Income (PSI) rules may apply. PSI can affect which deductions you can claim and how your income is treated.
This can be particularly relevant to:
- Consultants
- IT professionals
- Engineers
- Other skilled workers
If most of your income comes from your own personal efforts, check whether the PSI rules apply before lodging your return.
Do You Need to Register for GST?
If you are operating a business or working as a sole trader, GST may also need to be considered.The GST registration threshold is generally $75,000 in GST turnover for most businesses. Importantly, GST turnover relates to your business activities. Your PAYG salary from employment is not simply added to your business turnover when determining whether you have crossed the GST threshold. If you are approaching or exceeding the threshold, review your GST registration obligations.
Don’t Wait Until Tax Time to Deal With GST
GST, BAS and income tax are separate obligations and need to be managed throughout the year. Keeping accurate records can help prevent unexpected tax issues.
If You Changed From Employee to Contractor
Switching from employment to contracting during the financial year can create an unusual tax situation.
During your employment period:
- Your employer generally withheld PAYG tax.
After becoming a contractor:
- You may have received payments without tax being withheld.
Your tax return needs to include both periods.
This can result in an unexpected tax bill because tax was automatically withheld during your employment period but may not have been withheld from your contracting income.
Review Your Position When Moving Into Contracting
When moving into contracting, review:
- Expected annual income
- Business expenses
- GST position
- Tax obligations
Early planning can help avoid unexpected liabilities.
FIFO and Remote Workers
FIFO workers can also have more complicated tax returns, particularly if they have investment income, side businesses or other income sources. One common misconception is that working at a remote mine or worksite automatically makes you eligible for tax benefits.
This is not always the case.
Eligibility generally depends on:
- Where your usual place of residence is
- How long you lived there
- Whether you meet specific requirements
Keep evidence of:
- Your usual residence
- Dates you lived there
- Employment arrangements
Travel and accommodation deductions also depend on your circumstances and the nature of the expense.
Do not assume that all FIFO travel costs are automatically deductible.
What If You Earned Income From Overseas?
Australian tax residency is extremely important when you have foreign income.
Australian tax residents are generally taxed on their worldwide income.
This may include:
- Foreign salary
- Interest
- Dividends
- Rental income
- Other assessable foreign income
Foreign income generally needs to be converted into Australian dollars for Australian tax purposes.
What If You Already Paid Tax Overseas?
You may be entitled to a foreign income tax offset (FITO) for eligible foreign tax paid.
Generally:
- The foreign tax must have actually been paid.
- The related income or gain must be included in your Australian assessable income.
Keep your overseas tax statements and supporting documents. Do not assume paying tax overseas means you do not need to declare the income in Australia. Your tax residency and relevant tax treaties can affect the outcome.
Common Mistakes With Multiple Income Sources
When your return includes several types of income, watch out for these common mistakes.
Forgetting an Income Source
Make a list of every:
- Employer
- Business activity
- Investment
- Overseas income source
before lodging your return.
Claiming the Tax-Free Threshold Twice.
If you are working multiple jobs simultaneously, check which employer is claiming it.
Spending All Your ABN Income
Remember that tax may not have been withheld from contractor payments.
Mixing Business and Personal Expenses
Keep business records separate and only claim expenses that meet the relevant rules.
Ignoring GST
If you are operating a business and approaching the GST threshold, review your registration obligations early.
Assuming FIFO Means Automatic Tax Benefits
Working remotely or at a mine site does not automatically qualify you for every tax deduction or offset.
Forgetting Foreign Income
Australian tax residents generally need to declare worldwide income, even if the money remains overseas.
Documents to Have Ready
Before lodging your tax return, gather:
Employment Income
- Income statements
- PAYG payment information
- Work-related expense records
- Details of any allowances or reimbursements
ABN or Business Income
- Invoices and payment records
- Business expenses and receipts
- BAS records
- PAYG instalment information
Investments
- Bank interest records
- Dividend statements
- Managed fund statements
- Rental property records
- Capital gains and losses information
Foreign Income
- Overseas payslips or income statements
- Foreign tax records
- Exchange-rate information
- Evidence of foreign tax paid
FIFO or Remote Work
- Employment records
- Residence information
- Allowance details
- Relevant travel and accommodation records
How to Make Your Tax Return Easier
If you have multiple income sources, do not wait until tax time to organise everything.Keep records throughout the year.
Set up separate folders for:
- Employment income
- Business income
- Investments
- Foreign income
Track ABN income separately. Record every payment received and every business expense. Check your PAYG withholding if your income changes significantly. Review your tax position before 30 June. If you are expecting a large tax bill, early planning may give you more options.
Get Advice When Things Become Complicated
Multiple income sources are not necessarily a problem.
However, the interaction between different types of income, deductions, GST and tax offsets can become complex.
If your situation includes:
- Contracting
- Foreign income
- Investment properties
- Trusts
- Significant business income
professional tax advice can help ensure everything is reported correctly.
The Bottom Line
Having multiple income sources does not mean you need multiple tax returns. Your relevant income is generally brought together in your individual return, but how each income stream is treated can vary considerably.
The key is to:
- Keep good records
- Understand your PAYG withholding
- Separate business and employment expenses
- Check your GST obligations
- Make sure foreign income is reported correctly
A little planning throughout the year can make tax time much easier and help reduce the risk of an unexpected tax bill.
Frequently Asked Questions
Do I need a separate tax return for each job?
No. Multiple employment income sources are generally reported in the same individual tax return.
Can I claim the tax-free threshold with two employers?
Generally, you should only claim the tax-free threshold from one employer at a time when working multiple jobs simultaneously.
Do I pay tax on ABN income?
Yes. Business or contracting income generally needs to be declared, with tax calculated as part of your overall taxable income.
Do I need GST registration if I have an ABN?
Not automatically. GST registration is generally required once your business reaches the applicable $75,000 GST turnover threshold, subject to the relevant rules and exceptions.
Do Australian residents have to declare foreign income?
Generally, yes. Australian tax residents are generally taxed on worldwide income, subject to specific exceptions.
Can I claim tax on income already taxed overseas?
You may be able to claim a foreign income tax offset if you meet the eligibility requirements.
How Can We Help?
If you have any questions or would like further information, please contact Camden Professionals on:
Phone: 08 9221 5522
Email: info@camdenprofessionals.com.au
You can also arrange a meeting so we can discuss your requirements in more detail.
General Advice Warning
The material on this page and on this website has been prepared for general information purposes only and not as specific advice to any person.
Any advice contained on this page and on this website is General Advice and does not consider any person’s particular investment objectives, financial situation and particular needs.
Before making an investment decision based on this advice you should consider, with or without the assistance of a securities adviser, whether it is appropriate to your particular investment needs, objectives and financial circumstances.
The examples provided on this page and on this website are for illustrative purposes only.
Although every effort has been made to verify the accuracy of the information contained on this page and on this website, Camden Professionals, its officers, representatives, employees, and agents disclaim all liability except for any liability which by law cannot be excluded, for any error, inaccuracy or omission from the information contained in this website or any loss or damage suffered by any person directly or indirectly through relying on this information.
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