Tax on overtime

[Pommy]

so tomorrow I have my first opportunity to do paid overtime in about 13 years and never in Australia.
My mrs who has lived here her entire life thinks it’s taxed at almost 50%, that can’t be right can it?

 

[SBD82]

so tomorrow I have my first opportunity to do paid overtime in about 13 years and never in Australia.
My mrs who has lived here her entire life thinks it’s taxed at almost 50%, that can’t be right can it?

It depends on what tax bracket the OT (ie the money made on top of your normal wage) will be taxed at.

This might help?

https://www.ato.gov.au/uploadedFiles/Content/MEI/downloads/Weekly-tax-table-2018-19.pdf

 

[jim_57]

so tomorrow I have my first opportunity to do paid overtime in about 13 years and never in Australia.
My mrs who has lived here her entire life thinks it’s taxed at almost 50%, that can’t be right can it?

Like SBD said it's not overtime in general that gets taxed 50% but if you're already into the top tax bracket before OT or the OT pushes you in to the top tax bracket then yeh it will be 47% I think. Depends on what your regular income is before the Overtime.

Not an expert by any means but that is my rough understanding of it. Then there are other things like pre-tax super contributions that affect it as well.

 

[SpaceMonkey]

Like SBD said it's not overtime in general that gets taxed 50% but if you're already into the top tax bracket before OT or the OT pushes you in to the top tax bracket then yeh it will be 47% I think. Depends on what your regular income is before the Overtime.

Not an expert by any means but that is my rough understanding of it. Then there are other things like pre-tax super contributions that affect it as well.

Yep this is true. Tax is entirely dependent on what bracket you end up in overall, hours don’t matter. I get smashed with tax when I work a lot of weekends and nights because I get pushed into the top bracket. A rough rule of thumb is that once your getting close to $2K after tax for a week, you’ll find you need to put in the hours to get much more as that tax bracket really starts to bite around that point.

 

[Bandwagon]

Then it's also averaged out over the course of the year, so whilst in a week where your earnings are high, your tax will be high, if that's not the norm, and your annual income doesn't push you into that bracket, you'll be refunded the difference.

 

[SpaceMonkey]

Then it's also averaged out over the course of the year, so whilst in a week where your earnings are high, your tax will be high, if that's not the norm, and your annual income doesn't push you into that bracket, you'll be refunded the difference.

Yep this tends to happen to me a bit as I’m on a fortnightly pay cycle and a rotating roster so one pay cycle I’ll be doing day shifts and the other I’ll be doing nights and arvos which can double my gross income. Makes budgeting a bit more of a pain but it does result in a decent refund. Used to happen even more when I was casual or contracting as I’d have periods when I’d be smashing out 60-70 hour weeks then periods when I was barely working, add in all the usual tradie deductions and 3-4K returns were the norm. As I’m permanent with a salaried component now my hours are more consistent so that’s dropped off. But it still pays my car rego and green slip off.