Secondary Income Tax Query

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Forums › Finance and wealth management › Secondary Income Tax Query

Paul1977

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#217990 21-Jul-2017 14:06

My partner and I were having a debate.

She says that if you work two jobs you are taxed more heavily than if you work a single job for the same amount.

E.g. someone working two jobs earning $25000 each will pay more tax than someone working a single job at $50000.

I say that while the flat tax rate on secondary income may result in you paying more tax throughout the year, that your tax obligation is based on total income (regardless of the number of jobs) so you be entitled to a tax refund of the difference.

The IRD website doesn't seem to be entirely clear on this (at least to me), so which one of us is correct?

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TheMantis

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#1826520 21-Jul-2017 14:11

You are right and she is wrong. Secondary income tax is exactly the same as primary income tax. However, you will possibly incur more PAYE now and have to claim it back at the end of the tax year once an actual yearly tax liability is determined.

richms

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#1826521 21-Jul-2017 14:13

You are. Also you get really screwed with secondary income when you have a student loan.

PAYE rates are set to get enough that most people do not have a tax bill at the end of the year, so its too much in most cases. Only accurate if you never get a pay rise, never cash out holiday pay, dont take any unpaid days etc. Tax return time is when you work out the total tax you should pay on your total income for the year, and either pay more or get the refund of what PAYE has overtaken from you. Most people get a refund because they have had a pay increase, or taken time off, or whatever so there were a variety of payment amounts thruout the year. If you have been taxed on secondary pay then you are straight into the higher tax rates so will get a refund.

Richard rich.ms

Paul1977

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#1826599 21-Jul-2017 14:37

Thanks guys.

Paul1977

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#1826600 21-Jul-2017 14:38

richms:

You are. Also you get really screwed with secondary income when you have a student loan.

Hows does this screw you?

richms

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#1826632 21-Jul-2017 15:16

Paul1977:
richms:

You are. Also you get really screwed with secondary income when you have a student loan.

Hows does this screw you?

10% Payment applied to the whole lot on the job with secondary income no matter how low it was.

Richard rich.ms

Paul1977

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#1826640 21-Jul-2017 15:30

richms:
Paul1977:

richms:

You are. Also you get really screwed with secondary income when you have a student loan.

Hows does this screw you?

10% Payment applied to the whole lot on the job with secondary income no matter how low it was.

Right, but you can claim back student loan over payments can't you?

I seem to recall from the days before mine was paid off that I'd get summaries telling me how much I'd paid, with an option to claim back anything over the minimum required.

EDIT: Just looked it up and you can get a refund for overpaid student loan repayments, but only if the over-deductions were "significant" - i.e. greater that $60 per month. This may have changed from my days.

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Aredwood

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#1826704 21-Jul-2017 17:55

Best way is to have yearly pay reviews lining up with the start of the financial year. So the normal PAYE calculations will be almost completely correct the first time.

richms

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#1826805 21-Jul-2017 19:48

Doesn't help you when you're counting on that money as you earn it. Most people I know just kept getting employers to change them to the standard rate and dealt with it at return time. They send you a bill if you owe them

Richard rich.ms

cadman

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#1827145 22-Jul-2017 16:27

Of course you're right. But a wise man would apologise and admit he's wrong.