Why Some FIFO Workers Are Getting a Tax Bill Instead of a Refund This Year

Every year around tax time, blokes who've done the right thing all year, logged their hours, kept their receipts, put in for their PPE, sit down expecting a few grand back and instead find out they owe the ATO money. Nobody warns you this can happen. You hear about FIFO workers claiming big refunds for flights and laundry and gear, so when the number comes out negative instead of positive, it feels like something's gone wrong. Usually nothing has gone wrong exactly. It's just maths catching up with how you were actually paid during the year.

This situation is more common in FIFO than almost any other type of work, because FIFO careers are built on exactly the conditions that cause it: swinging between employers, picking up shifts in your off week, moving sites mid-year, going from casual to permanent, or working for a labour hire mob while you wait on a direct role. Any one of those can quietly create a tax debt without you doing anything wrong on purpose.

How the tax-free threshold actually works

The tax-free threshold is the first $18,200 you earn in a financial year, and it's tax free. When you start a job and fill out the TFN declaration form, there's a question asking if you want to claim the tax-free threshold from that employer. Almost everyone ticks yes, because almost everyone has only one job.

The problem is the threshold is meant to apply once, across your whole income for the year, not once per employer. If you claim it with Employer A and then also claim it with Employer B, both employers withhold tax as if the first $18,200 you earn with them is tax free. Add them together and the ATO sees you've effectively had $36,400 or more treated as tax free, when only the first $18,200 of your total income actually is.

That gap doesn't disappear. It gets squared up when you lodge, and if too little tax was withheld across the year, squaring up means you owe the difference.

The classic FIFO scenarios that cause this

This isn't a rare edge case. It happens constantly in this industry because of how the work is structured. A few situations worth checking against your own year:

• Mid-year site change. You left Employer A in October after six months on an eight and six swing, started with Employer B in November. If you ticked "claim the tax-free threshold" on both TFN declarations, you've effectively claimed it twice.
• Labour hire plus direct employer. Some FIFO workers run a labour hire gig alongside picking up short block work through a second agency during swings off. Two employers, two TFN declarations, same mistake.
• Casual shifts during R&R. You do a few days of local casual work, maybe driving, maybe trade work, while you're home between swings. If you claimed the threshold there too, on top of your main FIFO employer, it adds up the same way.
• Short-term or seasonal contracts. Construction and shutdown work often means multiple short contracts across the year with different companies. Each new TFN declaration is a fresh chance to tick the threshold box without realising you already have it ticked elsewhere.

None of this is fraud or even carelessness in the way people assume. The TFN declaration form doesn't stop you from ticking yes twice. It's on the worker to only claim it with the employer paying the most, or the one you expect to work with for longest in the year, and to tick "no" everywhere else.

It's not just the threshold

The double threshold claim is the biggest and most common cause, but a few other things stack on top of it for FIFO workers specifically:

Allowances taxed differently to how they're spent. Site allowances, travel allowances and the like are usually added to your assessable income and taxed at your marginal rate, but withholding doesn't always keep pace with how much extra that pushes you into a higher bracket, especially if you've had a pay rise or picked up overtime during the year.

HECS or HELP debt thresholds. If you've got a student loan, the repayment threshold for the 2023-24 year sits around $51,550, and repayments step up in bands from there. FIFO income with allowances and overtime can push your total income into a higher repayment bracket than your base salary alone would suggest, and if your employer wasn't withholding enough HECS repayment across the year, that's a second source of underpayment riding alongside the threshold issue.

Private health insurance and the Medicare levy surcharge. Some younger or newer FIFO workers don't have private hospital cover, and once total income (including allowances) crosses $93,000 for singles in 2023-24, the Medicare levy surcharge kicks in on top of the standard 2% levy. If your income jumped mid-year because of a new role or a run of overtime, this can catch people who weren't close to the threshold in previous years.

How to check before you lodge

The good news is this is easy to check yourself before you even get near a tax agent, and it only takes about ten minutes if you've got your payment summaries or income statements in front of you.

• Log into myGov and open the ATO section. Under "Employment," you'll see every employer who has reported income for you this financial year, with the gross amount paid and the tax withheld from each.
• Add up the gross income across all employers. This is your total assessable income before deductions, not just the number from your main job.
• Check the withholding percentage for each employer. Divide tax withheld by gross income for each one. If one employer withheld something like 15-18% and another withheld almost nothing (because it looked like a small, standalone income claiming the threshold), that's the signature of a double threshold claim.
• Use the ATO's tax withheld calculator against your combined income to see roughly what should have been withheld across the year, then compare that to what actually was. The gap is roughly what you'll owe.

If you do this in June, before the financial year closes, you can actually do something about it. Contact whichever employer you're not claiming the threshold with and ask payroll to increase withholding for your remaining pay cycles, or ask them to withhold an extra flat amount each pay. It won't fully undo an underpayment that's already happened, but it closes the gap for whatever's left of the year.

What to do if it's already happened

If you're reading this after the financial year has closed and you've already seen the number, the first thing to know is that a tax debt from this isn't a penalty. You haven't been fined, you haven't broken any rules, you just haven't had enough tax taken out along the way, and now it's due. The ATO treats it the same as any other return result.

A few practical things to know:

• Payment plans are normal and easy to set up. The ATO allows you to set up a payment plan through myGov or by phone, and for most individual debts under $100,000 this can be done online without having to speak to anyone. Weekly, fortnightly or monthly instalments are all options.
• Don't skip lodging because you're worried about the bill. Late lodgment penalties and interest on an unpaid debt are worse than just facing the number. Lodge on time, set up a payment plan if you need one.
• Get your deductions right to soften the blow. This is the year to make sure you're claiming everything you're entitled to: self-education related to your ticket or trade, protective equipment not supplied by your employer, union fees, and work-related phone and internet use if you use it for rosters, inductions or site comms. These won't erase a debt caused by under-withholding, but they reduce your taxable income and bring the number down.
• Talk to a tax agent who actually knows FIFO work. Generic advice from someone who's never dealt with swing rosters, LAFHA, or site allowances can miss deductions specific to this industry. A FIFO-literate accountant will usually pay for themselves.

The simplest fix going forward is also the most boring one: only tick "claim the tax-free threshold" on the TFN declaration for whichever employer pays you the most, or the one you expect to be with the longest across the year. Tick "no" on every other one. It feels wrong when you're filling out a form for a new casual gig and it's asking if you want tax-free income, but ticking no there is exactly what keeps your withholding in line with your actual total income, and keeps your tax return a refund instead of a bill.