The 60-second diagnosis
| Fingerprint on your pay | Likely cause | The fix |
|---|---|---|
| Withheld about $105 more per fortnight than workmates on the same pay | No tax-free threshold claimed | Withholding declaration to your main employer |
| A steady extra slice at every pay, growing with income | HELP debt flag | Correct, unless the debt is paid off; then update your declaration |
| A dollar or two off the calculator every week | Tax table rounding | None needed; it washes out at assessment |
| One brutal payslip in bonus month | Bonus taxed in a high period | Refund at assessment; employer can use Schedule 5 averaging |
| Second job taxed far harder than the first | Threshold already used at job one | Correct by design; claim the threshold only once |
| Roughly $322 extra per fortnight from the first dollar | Non-resident rates applied | Fix the residency answer on your TFN declaration |
Before changing anything, get your true 2026-27 figure from the PAYG calculator and compare it with the payslip. The gap tells you which row you are in.
The six causes, with fixes
1. The tax-free threshold is not being claimed
Claiming the threshold keeps your first $18,200 tax-free at the withholding stage. Miss the tick-box and a $60,000 earner is over-withheld by about $2,730 a year. It happens on incomplete TFN declarations and job changes. Whether and where to claim it is covered in the tax-free threshold guide; the fix is a withholding declaration to your main employer.
2. A HELP debt flag
Ticking the study loan box adds the repayment on top of income tax. At $80,000 that is $1,571 extra withheld across 2026-27. This one is usually correct rather than a mistake; the real error is the reverse, paying out the loan and forgetting to have the flag removed.
3. Schedule rounding
The ATO's withholding schedules work in whole-dollar steps, so the payslip figure can sit a dollar or two above the exact formula every period. Nothing is wrong and nothing is lost; the cents reconcile at assessment.
4. A bonus taxed in a high pay period
Pay software that lumps a bonus into a single period withholds as if you earn that much every period, which overshoots your annual rate. Employers can average lump sums under Schedule 5 instead, and any overshoot returns as a refund at assessment either way.
5. Second-job stacking
Your second employer withholds without the tax-free threshold, so the same gross pay produces noticeably more tax than at job one. That is the system working correctly: one threshold, claimed once. The second job tax calculator shows the combined position across both payers.
6. Wrong residency status
Answer the residency question wrong on a TFN declaration and non-resident rates apply: 30% from the first dollar in 2026-27, no threshold. On $60,000 that withholds $8,380 more per year than resident treatment. If you are a resident by the ATO's tests, correct the declaration with your employer and the difference comes back at assessment.
Check your exact number
Every cause above leaves a measurable gap. Run your salary, threshold status, HELP flag and residency through the calculator, then match the result against a payslip. A payslip that agrees with the correct settings means the withholding is right and any relief has to come from the levers in how to reduce PAYG tax, not from payroll.
Frequently asked questions
Why is my tax so high this year?
Why is my PAYG withholding so high on my second job?
My employer withheld a huge amount from my bonus. Is that legal?
Do I get over-withheld tax back?
How do I stop over-withholding during the year instead of waiting for a refund?
Sources
- ATO: Tax rates: Australian residents
- ATO: Tax rates: foreign residents
- ATO: Varying your PAYG withholding
Related resources
PAYG Calculator
Your correct 2026-27 withholding to compare against
Open →Tax-Free Threshold
Whether to claim it, and what happens on job two
Open →PAYG Withholding Variation
Cut over-withholding during the year
Open →
Narelle Hartigan is a CPA-qualified tax accountant with over a decade of experience in Australian personal taxation and payroll. She founded PAYG Calculator Australia to make tax withholding easy for every Australian worker to understand.