If you are new to the country or are applying for your first job – there are several things you should know to ensure that you complete the proper paperwork, receive a fair wage, and launch your career in Australia successfully!
Tax File Number Declaration Form
Upon employment, your employer will ask you to complete a Tax File Number Declaration Form. It is vital that you complete this form and submit it to your employer as soon as possible. If this form is not completed, you will be considered to be in the highest tax bracket by default and be taxed at the highest rate of 46.5 per cent (ouch).
If you don’t have a TFN you need to contact the Australian Taxation Office (ATO) right away. You can apply for your Tax File Number online.
If you are still under the age of 18, it is easier to contact your school about obtaining a Tax File Number. Your school will provide you with information about the Secondary School TFN Program operated through the ATO office.
Below are some basic questions that people starting a job often have about paying their taxes.
If you live and/or work in Australia and earn more than $18,200 during the financial year, which runs 1 July to 30 June, you will be required to pay taxes. The government collects these taxes from all residents in order to provide public roads, schools, and healthcare services.
- Do I Pay Taxes on All of My Earning?
In Australia, you are not required to pay taxes on the first $18,200 you earn each year. This is referred to as the tax-free threshold. When you complete your Tax File Number Declaration Form, you must select to claim this tax-free threshold. After you earn more than $18,200, taxes will start to be automatically deducted from your earnings. This threshold can change from time to time but as of the date of this article it is $18,200.
If you have multiple employers, or receive payments from Centrelink, you must determine where you want to claim your tax-free threshold. Typically, you choose to claim the tax-free threshold on the one that pays you the most. You must then not claim the tax-free threshold on any other Tax File Number Declaration Forms you complete.
Each week your employer will deduct a set amount of taxes off your earnings. The amount deducted depends on your specific set of circumstances and your earnings. At the end of the financial year, your employer will provide you with a Payment Statement that will include information about your annual earnings and the amount of taxes paid.
- When Should I Submit a Tax Return?
You will need your Payment Statement to complete your tax return, which must be submitted to the ATO by 31 October. If you fail to meet this deadline, you may face a penalty. If more taxes were taken from your pay, or you are eligible for any type of tax deduction, you will receive a tax return from the government.
- What If I am Under 18-Years Old?
Residents under the age of 18-years old are still required to pay taxes, just like all other residents. If you earned over $18,200, you will still need to complete a tax form at the end of the financial year.
The government has also put into place strict regulations about income, other than earned wages, received by those under the age of 18-years old. In fact, if you have received more than $416 throughout the year in additional income, such as distributions from a trust fund, you may be taxed at a much higher rate.
This is done to prevent parents from filtering money through their children to avoid paying taxes. There are some exceptions to this rule for those no longer in school or disabled.
Your employer is required by law to provide you with a payslip within one day of receiving your pay. This must be a paper payslip or an electronic payslip that is emailed to you or set up in a separate account. The payslip must include specific information, such as the pay period, pay date, gross wages, net wages, number of hours worked, hourly or annual pay rate, overtime hours, and a listings of any deductions taken from your pay.
It is very important that you check over your payslip every time you are paid to make sure everything is correct. You should report any errors to your employer as soon as possible.
If you think you may not be receiving fair pay or benefits, you should visit the Fair Work Ombudsman website. This site provides a lot of valuable information about fair pay, awards requirements, workplace condition requirements, entitlements, and allowances. They can help you learn your rights under the law and help resolve disputes with your employer.
Retirement Savings (Super)
Did you know that researchers state that it will cost nearly a half a million dollars to retire at the age of 65-years old and live comfortably? Now that you have a job, it is important to start thinking about your savings, and even your retirement.
If you are over the age of 18-years old and you make a minimum of $450 each month, your employer is required by law to contribute to your super fund. The employer is required to put at least 9.25 per cent of your ordinary wages into the super fund at least one time every three months. There is a maximum contribution base set by the government each year that limits the amount the employer must pay.
You can also choose to contribute a set amount each pay period to your super fund. If you have low or middle-class income, you may also be eligible to receive governmental matching funds into your super fund each year.
You are usually able to choose your own super fund. Over time, it is possible to open several super funds, but you will pay administrative fees for each account. It is a better idea to consolidate all of your super fund accounts into one account. This will make it easier to manage and save you money. You can look for old accounts and gather information about your current accounts through SuperSeekers, a governmental service.
You should also consider setting up your own savings account. Find a bank that offers savings accounts with high interest, so you can make the best return on your money. Learn more about savings accounts here.
Do you have enough money to protect you and your family financially if you are ever injured or become ill? If not, you should consider obtaining an Income Protection insurance policy. This policy will help to cover some of your expenses if you are ever unable to work to do an illness or injury. Learn more about insurances here.
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