Hi,
I'm starting a new job next year and it's paying close to 50k. The question is should I claim the tax-free threshold? I don't understand it too much. What is the difference between claiming it and not claiming it?
Extra Note: I currently do have a job, but did not claim tax free threshold for it and also will be leaving, before I start my other one.
Thanks
You'd be an idiot not too. Claiming it just means you are not paying tax on the first $18k you earn, not claiming it is like kissing $5k good bye
Actually no. You get the tax back when you submit your tax return.
robbie jones is right. Generally you would claim the tax free threshold but if you dont, just get the money in your tax return. One reason why you may choose not to claim it, is that its forced savings (sudden $6000 at tax time wouldnt go astray). But still, normally you would just claim it.
One reason why you Should not claim it is if you have two jobs. You would then only claim it on one job.
True, but you would miss out on the interest from your savings.
The tax scale means that you pay varying amounts of tax depending on how much you earn. If you are working more than one job and claim the tax free threshold on both jobs you will be underpaying tax and face a potentially large tax bill at the end of the year. If you don't already have a job then claim the tax free threshold, definitely. If you do already have a job then you will need to decide which job you claim the tax free threshold for - generally the one that you earn the most at. If you have a job already and this is a second job and you are unsure if you are claiming the tax free threshold already ask your employer.
When you are working multiple jobs you can only claim the tax free threshold at one place. They use this to determine how much tax they are going to withhold.
If you only have one job then, yes, claim the tax-free threshold.
I have never claimed the tax free threshold and like jaybmate said, have used it as forced savings. I know that I miss out on the interest doing it that way, but it works for me.
The extra money at tax return time has always covered large purchases that I would otherwise save up for, a new computer one year, a Thermomix another, painting the house, etc.
For me, it was a great move because I have never missed the money and I would recommend doing the same to others, but yes, I am aware that I miss out on the interest on those savings. Each to their own.
I've given you a + not because of the strategy but because it definitely works for people who don't have the discipline to set aside specific money - and anecdotally that's a very large % of people.
Ultimately you'd just be lending money each month to the ATO at zero percent interest.
Can't think why you'd do that. Just setup a monthly transfer to a savings account or mortgage offset account. There must be better ways of using your money than lending it free of charge.
Yep. And find out if your employer has salary sacrifice to save on other things. Not complex even if it seems so on the surface.
Really cleared things up! Thanks for that peeps! :)
Will claim.
Claim it and put the forced savings into super as a personal deposit. That way, you get any rise in value for the long term.
Tax free threshold is $18200…