Tax codes assist your employer in calculating how much tax should be deducted from your pay, benefit or pension.
It is important to calculate your code and inform your employer as failing to inform them will result in getting tax at the non-declaration rate of 45%. You should also be updating your employer if your tax code changes at any point.
Your tax code is influenced by the following factors:
- Your main income
- Your secondary income
- Whether you have a student loan
- Whether you are receiving schedular payments
- Whether you are a casual agricultural worker
- Whether you are a recognised seasonal worker
- Whether you are helping with election day work
The government might change your code if they believe you are using the wrong one. This is to avoid excessive taxation or to prevent you from receiving a bill to pay remaining taxes at the end of the year. You are able to inquire about why changes were made if you disagree.
