Starting a new job means filling in a tax file number (TFN) declaration. One question on it asks whether you want to claim the tax-free threshold from this payer, and your answer changes how much tax comes out of every pay.
This guide is the practical how-to: where to find the form, how to answer the question, the one-payer rule, how to change your mind later and how Centrelink payments fit in. It applies to the 2026-27 income year and to 2025-26 returns being lodged now, and the steps were checked against the ATO tax-free threshold guidance and the ATO TFN declaration pages.
It is for employees, students, people with more than one job and anyone receiving a government payment while working. For what the threshold is and who qualifies, see our guide to what the tax-free threshold is.
Key takeaways
- You claim the $18,200 threshold by answering Yes on your TFN declaration, before payments start.
- Claim it from one payer only, usually the one paying the most, unless your total income will be $18,200 or less.
- With the threshold claimed, payers start withholding above about $363 a week, $726 a fortnight or $1,573 a month.
- To change your answer with the same payer, give them a withholding declaration.
- Working holiday makers and foreign residents answer No, except a foreign resident receiving an Australian Government pension or allowance.
- No TFN within 28 days of applying means your payer must withhold at the top rate.
Claiming the tax-free threshold at a glance
| Your situation | Answer to the threshold question | Form to use |
|---|---|---|
| Resident with one job | Yes | TFN declaration |
| Resident with a second job or extra payer, total income over $18,200 | Yes for one payer, No for the others | TFN declaration |
| Several payers, total income certain to be $18,200 or less | Yes for each payer | TFN declaration, then withholding declaration if income rises |
| Working holiday maker | No | TFN declaration |
| Foreign resident | No (unless receiving an Australian Government pension or allowance) | TFN declaration |
| Changing your answer with an existing payer | Yes or No as now applies | Withholding declaration |
Source: ATO how to claim the tax-free threshold, ATO multiple jobs or change of job and ATO withholding declaration, checked 9 October 2026.
What does claiming the threshold actually change?
Claiming the threshold changes the tax withheld from each pay, not the tax you finally owe. Your final tax is worked out when you lodge your return.
The ATO says that when you claim it, your payer withholds tax once you earn above $363 a week, $726 a fortnight or $1,573 a month. That is a little higher than $18,200 spread over a year ($350 a week) because the withholding tables also allow for the low income tax offset.
If you do not claim it, tax is withheld from your first dollar. You get any extra back when you lodge, but you go without that money during the year. Our tax-free threshold weekly and refund guide shows the pay-period figures in more detail.
How do you claim it on your TFN declaration?
You should complete a TFN declaration before you start receiving payments from a new payer. The ATO lists three ways to do it:
- Your payer’s own electronic form, often part of onboarding software. Check with them first.
- The ATO online form through myGov: sign in, open the Australian Taxation Office in your linked services, then select Employment and New employment. Your myGov account must be linked to the ATO, which our myGov linking guide walks through.
- A paper TFN declaration (NAT 3092), which you must use if you do not have a TFN or are exempt from quoting one.
On the paper form, the tax-free threshold is Question 9. Older guides, including an earlier version of this article, referred to Question 8. Answer Yes if you are an Australian resident for tax purposes and you are not claiming the threshold from another payer, or you are but your total income will be below the threshold.
Your payer then sends the details to the ATO, generally within 14 days, or through their Single Touch Payroll reporting. A new declaration overrides any earlier one with that payer.
Can you claim it from more than one employer?
Generally no. The ATO says you claim it from one payer, usually the one paying the highest salary or wage. A second payer could be another job, a taxable pension or government allowance, or work under an ABN. The exception is when you are certain your total income from all payers will be $18,200 or less.
The ATO gives these 2025-26 examples of what happens at tax time:
| ATO example | Situation | Tax withheld in the year | Result |
|---|---|---|---|
| Sue | Two jobs, threshold claimed only at her retail job, total income $26,000 | $66 a fortnight from the restaurant job = $1,716 | Tax and Medicare levy $548, refund $1,168 |
| Pierre | Pension $30,000 with threshold, part-time job $30,000 without | $320 a fortnight = $8,320 | Tax and Medicare levy $9,888, tax debt $1,568 |
| Jeff | Pension with threshold plus a part-time job, taxable income $18,000 | $50 a fortnight would be withheld at the job | Tax payable nil, all withholding refunded |
Pierre did everything by the book and still owed money, because two payers each withholding as if they were his only payer did not cover tax on $60,000. Our second job tax guide explains why this happens.
How do you change your choice later?
To claim or stop claiming the threshold with a payer you already have, give them a withholding declaration (NAT 3093). You can complete it in ATO online services, download the PDF or call 1300 720 092 for a copy. It goes to your payer, not the ATO.
- Your income rises above $18,200 after claiming from two payers: give one of them a withholding declaration to stop the claim.
- You change jobs: once the old employer stops paying you, you can claim the threshold from the new payer on your TFN declaration.
- You want more or less tax withheld than the tables give: ask your payer to withhold more, or lodge a PAYG withholding variation application.
How do Centrelink payments affect the threshold?
Centrelink is one of the payers you can give a TFN declaration to. A taxable pension or government allowance counts as a payer, so if you also work, the one-payer rule applies across both. Jeff and Pierre in the table above show both sides of this.
The ATO also lists government allowances and payments as a common reason for an unexpected tax bill. If you receive a taxable payment and work, check your expected total income for the year before you decide where to claim.
What if you do not have a TFN yet?
If you have applied for a TFN, you have 28 days to give it to your payer. During that time they withhold at the standard rate. After that, the ATO payer rules require them to withhold the top rate until you provide it. New arrivals can read our TFN registration for new arrivals page, and our TFN guide explains how to find an existing number.
If you also earn business or investment income with no tax withheld, our quarterly PAYG instalment notice guide may apply. Employers setting up new staff can use our payroll services.
Worked example: claiming the threshold on both jobs by mistake
Sam has two jobs in 2025-26: Job A pays $40,000 and Job B pays $20,000. He ticks Yes on both TFN declarations.
Tax on Job A alone: ($40,000 – $18,200) x 16% = $3,488, less LITO of $575 ($700 – 5% x $2,500) = $2,913, plus Medicare levy of $800 = $3,713. On Job B alone, $20,000 is under the LITO and Medicare low-income points, so close to nil. Withholding on both jobs will roughly track these amounts.
Actual tax on $60,000: $4,288 + ($15,000 x 30%) = $8,788, less LITO of $100 ($325 – 1.5% x $15,000) = $8,688, plus Medicare levy of $1,200 = $9,888.
Sam’s likely shortfall: $9,888 – $3,713 = about $6,175, payable after he lodges. Ticking No on Job B fixes most of this.
Rule of thumb: One payer gets Yes and every other payer gets No, unless you are certain your total income from all payers this year will be $18,200 or less.
Common mistakes when claiming the tax-free threshold
- Ticking Yes for every job: the most common cause of a surprise tax bill.
- Forgetting Centrelink is a payer: a taxable pension or allowance counts towards the one-payer rule.
- Not updating when income rises: if you claimed from two payers on low income, give a withholding declaration once you expect to pass $18,200.
- Sending forms to the ATO: TFN and withholding declarations go to your payer. The ATO gets the details from them.
- Working holiday makers ticking Yes: they are not entitled to the threshold and should answer No.
FAQ about claiming the tax-free threshold
How do I claim the tax-free threshold in 2026?
Answer Yes to the tax-free threshold question (Question 9 on the paper form) on the TFN declaration you give a new payer. You can use your payer’s own electronic form, the ATO online form through myGov, or a paper form. Claim it from one payer only unless your total income from all payers will be $18,200 or less for the year.
Is the tax-free threshold applied automatically?
In your tax return, the nil band is built into the resident rates, so you do not claim it there. During the year it is not automatic. Your payer only builds it into withholding if you answer Yes on your TFN declaration. If you do not provide a TFN within 28 days of applying for one, your payer must withhold at the top rate.
Can I claim the threshold from two jobs?
Only if you are certain your total income from all payers for the year will be $18,200 or less. Otherwise claim it from one payer, usually the one paying the highest salary or wage, and answer No for the others. If your income later rises above $18,200, give one payer a withholding declaration to stop the claim.
How do I change my answer with an employer?
Give that payer a withholding declaration. It lets you claim or stop claiming the threshold, update your residency status and change study loan details. You can complete it in ATO online services through myGov, download the PDF or call 1300 720 092 for a copy. It goes to your payer, not the ATO, and applies to payments after you provide it.
Do Centrelink payments count as a payer?
Yes. A taxable pension or government allowance is one of the payers the ATO lists, and you can give Centrelink a TFN declaration. If you also work part-time, you generally claim the threshold from only one of them. If your total income for the year will be $18,200 or less, you can claim it from both.
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Talk to a registered tax agent
Claimed the threshold twice or not sure which payer should get it? Nanak Accountants can review your payslips, estimate your year-end position and lodge your return. Call 1300 626 258 to speak with a registered tax agent.
This article is general information only and is not personal tax or legal advice. Figures and rules were checked against the ATO tax-free threshold, multiple jobs, TFN declaration, withholding declaration, payer obligations and tax bill pages on 9 October 2026. Rates and thresholds change, so confirm the current position before acting.
