Do Casual Workers Pay More Tax?

Do Casual Workers Pay More Tax?

Casual worker in a bakery smiling.

Casual work arrangements offer adaptability for both employers and employees, allowing businesses to manage varying workloads and granting workers autonomy over their schedules.

But amidst the advantages, a fundamental question arises: Do casual workers end up with a higher tax bill in Australia?

In this blog, our tax refund specialists delve into the intricacies of taxation, aiming to clarify the misconceptions surrounding tax responsibilities for casual workers.

Do Casual Workers Pay More Tax?

No, casual workers in Australia must abide by the same income tax rates as all other members of the Australian workforce.

The first $18,200 of yearly income is not taxed. This rule applies to all Australian residents, regardless of whether the worker is casual or not.  Any income above this amount is taxed at a rate that depends on the worker’s income bracket. An individual’s income determines which tax bracket they fall into.

Note: Casual loading is subject to tax laws because it is seen as a taxable salary and wages.

How Much Tax Do Casual Workers Pay?

This depends on the amount earned during the financial year.

Please see the Australian Tax Office‘s tax table for 2023-2024 below:

Taxable Income

Tax on This Income

0 – $18,200 Nil
$18,201 – $45,000 19c for each $1 over $18,200
$45,001 – $120,000 $5,092 plus 32.5c for each $1 over $45,000
$120,001 – $180,000 $29,467 plus 37c for each $1 over $120,000
$180,001 and over $51,667 plus 45c for each $1 over $180,000

Note: The above rates do not include the Medicare levy of 2%.

However, using the average salary for a casual worker in Australia – which is $68,667 – we can work out a rough estimate.

For income between $45,001 and $120,000, the tax rate is $5,092 plus 32.5c for each $1 over $45,000.

To calculate a simple estimate of the tax someone who earned $68,667 within the 2023-2024 tax year would have to pay, we can:

  1. Calculate the excess over $45,000: $68,667 – $45,000 = $23,667.
  2. Calculate the tax on the excess amount: 32.5% of $23,667.
  3. Add the base tax of $5,092 to the tax on the excess amount.

Based on the above, the average casual worker would pay $12,784 in tax excluding deductions and the Medicare levy.

To check if you can expect a tax refund this financial year, you can use our handy tax refund calculator.

Please note: This is a generalised estimate and does not take into account your personal circumstances. For an accurate estimate, we recommend contacting a professional tax agent such as us.

How Does Australia Define a Casual Worker?

A casual worker is someone who has a job without a set pattern and the promise of the work becoming ongoing. These employees generally have fewer hours than the typical full or part-time employees and may be called upon to work with little advanced notice.

Other Tax Implications for Casual Workers

There are circumstances where employers who have incorrectly labelled and treated employees as casual workers may need to make payments for the benefits that were denied to these employees. This back pay may be while an employee is still working or after termination and is subject to pay-as-you-go obligations.

FAQs

Do casual workers pay tax in Australia?

Yes, you need to pay tax on your income if you are a casual worker. Your employer will deduct tax from your pay and send it to the Australian Taxation Office (ATO) on your behalf.

Do casuals get more tax back?

The amount of money an individual casual worker in Australia will vary based on how much they have paid already toward their taxes.

How do I know if I am a casual worker or a permanent employee?

Casual workers are employed on an irregular or intermittent basis, while permanent employees have ongoing employment with regular hours and entitlements. Your employment status should be outlined in your employment contract.

How do I negotiate my salary as a casual worker?

You can negotiate your salary as a casual worker just like any other employee. Research the industry standard for your role and experience level, and be prepared to discuss your skills and qualifications with your employer. You can also ask for a pay rise if you feel that your work warrants it

What is the tax-free threshold in Australia?

If you are an Australian resident taxpayer, the first $18,200 of income you receive is tax-free. This is called the tax-free threshold.

Can casual workers claim the tax-free threshold if they work multiple jobs?

No, if you work multiple jobs as a casual worker, you can only claim the tax-free threshold from one employer. This is because the tax-free threshold is a personal tax offset that can only be claimed once.

Do casual workers have to pay the Medicare Levy?

Yes, casual workers are required to pay the Medicare Levy if they earn above a certain threshold. The Medicare Levy is a tax that helps fund Australia’s public health system.

What is casual loading?

Casual loading is additional money paid to casual employees to make up for the fact that they do not receive other benefits from their employer, like overtime or paid vacation days. The rate of casual loading is 25 per cent.

What is the minimum amount of advance notice for terminating a casual employment?

Because of the nature of the employment, neither the employer nor the employee must meet a minimum amount of time for termination notice.

Do casual employees get superannuation funds?

If you are employed on a casual basis and are over the age of 18, the employer is obligated to pay a super payment if you also earn more than $450 per month.

Does a casual employee have a chance to change employment status?

According to the National Employment Standards or NES, a casual employee has the right to become a permanent part or full-time employee. This process is known as casual conversion.

Conclusion

Understanding all of the details surrounding how to calculate tax for casual workers can be confusing. Given the importance of correctly lodging income tax, many casual workers opt to have tax professionals file their taxes.

If you are unsure about what to do next with your taxes as a casual worker, please feel free to contact us. Our experienced team can ensure your taxes will be taken care of efficiently and correctly, getting you the best refund possible.

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