Why is 47% being taken out of my pay?

Most likely your employer doesn't have your TFN declaration, so they have to withhold at the top rate (45% plus the 2% Medicare levy). Give payroll your TFN and declaration and it should drop from the next pay.

Why was I taxed even though I claimed the tax-free threshold?

The threshold covers the first $18,200 you earn across the whole year, not every dollar. If your pay is high enough that you'd earn more than that over a year, some tax still comes out each pay. A big week can also push it up.

Can I claim the tax-free threshold on two jobs?

No, only one at a time. Claim it on the job that pays more and leave it off the second one, or you'll likely owe tax at the end of the year.

Will I get the tax back?

If more was withheld than you owe for the year, yes. It comes back as a refund when you lodge your tax return after 30 June.

I earned under $18,200 this year. Do I still need to lodge?

Often you'll want to, because that's how you get the withheld tax back. The ATO has a "Do I need to lodge a tax return?" check if you're not sure.

Learn · Tax

Why did my first pay get taxed so much?

A first payslip with a huge tax slice and a small take-home, next to a TFN card.

Missing TFN, the threshold box, a second job or a big week. Fix it, then get it back at tax time.

You open your first payslip and a huge chunk is gone. Sometimes close to half. The good news: it's usually one of four fixable things, and tax you didn't actually owe comes back when you lodge your tax return.

The tax on your payslip is PAYG withholding. Your employer takes an estimate out of every pay and sends it to the ATO. It's a guess, not the final bill: What even is PAYG?

Reason 1: Work doesn't have your TFN yet

This is the big one behind "why is PAYG taking 47% of my payslip?"

If you haven't given your employer a Tax file number declaration, they have to take tax out at the top rate. That's 45% plus the 2% Medicare levy, so 47%. It's not a penalty, just the rule when they don't have your details.

If you've applied for a TFN and told work, they withhold at the normal rate for 28 days while you wait. After that, if they still don't have it, it jumps to the top rate.

Fix: get your TFN to payroll and fill in the declaration. The number itself: What even is a TFN?

Reason 2: "Do I want to claim the tax-free threshold from this payer?"

That question on the TFN declaration matters. If you're an Australian resident for tax, the first $18,200 you earn each year is taxed at nil. That's the tax-free threshold.

Tick yes and payroll builds that free chunk into each pay, so less tax comes out. Tick no and they withhold as if you've already used it somewhere else. Way more tax, every pay.

Fix: if this is your only job, or your main one, you can usually fill in a new declaration (or a withholding declaration) to claim it. The details: What even is the tax-free threshold?

Reason 3: You've got two jobs

You only get one tax-free threshold, so you claim it on one job, usually the one that pays more. The second job then takes tax from every dollar, which makes that payslip look a lot stingier.

That's on purpose. Claim the threshold on both and too little comes out, so you owe money at tax time. How do I even handle tax with two jobs?

Reason 4: One big week (overtime or extra shifts)

Did you pick up a heap of extra shifts or a long run of overtime? The tax tables look at each pay on its own, roughly as if you earned that much every week of the year. A big week gets taxed like you're on a much bigger wage.

It evens out. Your actual tax is worked out on your total income for the whole year, not week by week. What even is overtime / penalty rates?

Bonus reason: HECS

If you ticked the study loan box, payroll takes a bit extra to cover your HELP repayment. It shows up in the tax line, so it can look like more tax. How do I even tell work I have HECS?

How do I check what should come out?

Grab your payslip and check three things:

Gross pay: hours times your rate, plus any penalty rates
Tax withheld: the PAYG line
Net pay: what actually landed

Then put your gross into the ATO's tax withheld calculator and compare. If yours is way off and you've given your TFN and claimed the threshold, ask payroll to check your details. It's a common setup slip. Payslip tour: How do I even read my first payslip?

Do I get it back?

If too much came out, yes. After 30 June you lodge a tax return. The ATO works out your real tax for the whole year and compares it with what was withheld. If more was taken than you owed, the difference comes back as a refund. If your total income for the year ends up under $18,200, you'll usually get all of it back. How to do your first tax return

What to do with the refund

Give it a job before it disappears. Top up your Emergency Fund, boost your Investing pot or fund a sinking pot, and keep a bit for something fun. The free First Pay Playbook covers the whole first-pay setup.

FAQ

Why is 47% being taken out of my pay?: Most likely your employer doesn't have your TFN declaration, so they have to withhold at the top rate (45% plus the 2% Medicare levy). Give payroll your TFN and declaration and it should drop from the next pay.
Why was I taxed even though I claimed the tax-free threshold?: The threshold covers the first $18,200 you earn across the whole year, not every dollar. If your pay is high enough that you'd earn more than that over a year, some tax still comes out each pay. A big week can also push it up.
Can I claim the tax-free threshold on two jobs?: No, only one at a time. Claim it on the job that pays more and leave it off the second one, or you'll likely owe tax at the end of the year.
Will I get the tax back?: If more was withheld than you owe for the year, yes. It comes back as a refund when you lodge your tax return after 30 June.
I earned under $18,200 this year. Do I still need to lodge?: Often you'll want to, because that's how you get the withheld tax back. The ATO has a "Do I need to lodge a tax return?" check if you're not sure.