Tax and YOU

Do I have to pay tax?

Most young people earn less income than the Australian Taxation Office (ATO) threshold level above which tax is payable. If you are an Australian resident and earn $6,000 per year or less, which in salary and wage terms is about $115 per week or less, you don't have to pay tax. This is known as the tax free threshold. When you finish full-time education, you may not be entitled to the full $6000 tax free threshold for the first year.

If at some time during the year you receive more than $115 per week, the amount you receive will be taxed. However, when you submit your tax return after the end of the financial year (30 June), if you have still earned $6,000 or less (such as if deductions are available to you), you'll generally receive the tax you paid as a tax refund (i.e. you'll get the money back).

What if I have two jobs?

Your employer is responsible for deducting tax from your pay. If you have one job only, your employer will only deduct tax when your weekly pay (before tax) is over $112. If you have two jobs, your second employer will deduct tax because the tax-free threshold can only apply to one job.

What happens to my tax?

The tax that is deducted from your pay goes straight to the ATO. You may get back some of the tax you pay as a tax refund when you put in your tax return at the end of the financial year. Find out how to obtain a tax refund.

How much tax will I pay?

Your employer calculates and deducts tax from your pay. Tax is calculated on a progressive tax scale. The more you earn, the higher your tax rate. Try calculating the tax of some young people like you.

Where does my Tax File Number come into it?

When you sign up for your job, your employer will ask for your Tax File Number (TFN). If you don't provide a TFN, you will have much more tax deducted from your wage than is needed.

Check out the tax difference between providing or not providing your TFN if you are earning $250 a week. Use the Tax Withheld Calculator on the Australian Taxation Office web site. Do two calculations, one answering 'Yes' to the question, ‘Has the payee provided a Tax File Number (TFN)?’, and one answering 'No'. You’ll need a Tax File Number in other situations, such as if you have earned interest from a bank account or dividends from shares.

Find out when and how you go about obtaining a Tax File Number.

Check out the part-year tax free threshold on the Australian Taxation Office web site.

Tax brackets

As you start to earn more money you will notice you pay more tax. Sorry, but it's true. As your income increases, the percentage of tax you pay increases as well; an increase in pay can move you into a higher 'tax bracket'. For example, if you earn under $6,000 per year, then you will not be taxed; this is the tax free threshold. If you earn $6,001, the extra $1 will be taxed at 17% as it has put you into a higher tax bracket.

Youth Allowance and Austudy

You can earn up to $236 per fortnight before your Youth Allowance or Austudy payments are decreased. To find out more about the youth allowance visit the Centrelink web site at www.centrelink.gov.au. You can also find out more information by accessing The Source web site at www.thesource.gov.au, and the Australian Taxation Office web site at www.ato.gov.au.