Make the most of your pay packet
Starting work can be an exciting and busy time. It's a good time
to consider any questions you might have about your pay,
superannuation and general financial wellbeing.
When you start work, don't just rely on your employer to get
your entitlements right. Here are some things you should do when
you start work for the first time.
Get a tax file number
When you start a job you must give your employer your tax file
number (TFN) and your bank account details. You must do this so
your employer can pay you.
Your employer will ask you to fill out a tax file number
declaration form, because if employer doesn't have your TFN, your
wages will be taxed at the top tax rate of 47%!
If you need a TFN, contact the Australian Taxation Office (ATO)
about applying for a tax file number.
For Australian residents you are now able to apply for a TFN
online. You can find more information on the ATO's webpage Australian residents - TFN
Who pays tax?
All Australian residents have to pay tax on the money they earn.
The ATO collects the tax and the government uses the money to
provide services like healthcare, schools and roads.
Do I have to pay tax?
You won't be taxed on the first $18,200 you earn in a financial
year (1 July to 30 June) because this is the 'tax-free threshold'. Any payments
you receive above that amount, including from Centrelink or your
employer, will be taxed.
Your employer will send you a payment summary (this used to be
called a 'group certificate') after the end of the financial year
(30 June). It shows how much you earned and how much tax you paid
in that year.
By submitting a tax return, you will get a 'tax refund' or money
back if you paid more tax than you should have or if you can claim
any tax deductions. For example, if you earned less than $18,200
and were still taxed, you can put in a tax return to get your money
back. For more information, see income tax.
Income tax calculator
When do I have to submit a tax return?
If any tax was taken from your pay, or you earned more than
$18,200 in a financial year, you must put in a tax return to the
ATO by 31 October, otherwise you may face a penalty. Find out about
submitting a tax return on the ATO website.
Find out what to do if you get a tax refund on our getting a
Work more than one job in a year? Minimise your tax by claiming
the tax-free threshold from the one that pays you more.
Receiving Centrelink payments or have more than one job?
If you work part-time and receive Centrelink payments, or have
more than one job, you must state from where you will claim your
$18,200 tax-free threshold for that financial year. You will have
to choose who you claim the threshold from whenever you start a new
job and fill out the TFN declaration form.
You can only claim the tax-free threshold from one employer or
one payer e.g. Centrelink, at a time. Read about how to claim the tax-free threshold.
Do I have to pay tax if I am under 18?
The same tax rules apply: once you earn over $18,200 in a
financial year, you must submit a tax return.
The ATO has special guidelines for the income of individuals under the age of 18,
so you might be taxed at a higher rate for any more than $416 that
is given to you from sources other than salary or wages. The ATO
does this to protect young people from being used by their
relatives to avoid tax.
Check your payslip
It's important to check your payslip to see you are getting the
right pay. Employers can make mistakes. Visit the Fair Work Ombudsman to see
if you are receiving what you deserve under your 'award', or the
legal contract about your conditions of employment. You can check
pay rates, leave entitlements and allowances for tools or uniforms.
It also provides information on how to resolve disputes with your
Case study: Anita checks her payslips
started working part-time at a music store. She was surprised when
her payslip showed that she was earning so little.
'My mum helped me work out that it was because I hadn't given my
TFN to my manager, or to my super fund. So my work was taxing my
pay at 47% - the top rate!'
'Once I gave them my details, my tax bracket dropped to 19%.
'When I checked my next few payslips, it also looked like I
wasn't getting paid overtime for the times I worked at night and on
public holidays. So my manager ended up giving me backpay. But I'm
really careful to check my payslips now and I know all about my
If you earn under $50,454 in 2015/2016, the government will
provide a co-contribution for extra super contributions you
For details and rates see ATO: Super co-contributions.
Superannuation is a way of saving for your retirement. But how much
is enough? Current research estimates the average single
Australian will need $500,000 for a comfortable retirement at
If you are over 18 and get paid more than $450 per month, then
your employer must pay money into your super fund. These employer
contributions will be made regardless of any extra super you add
yourself. Check your payslip to make sure you are getting the right
amount or use the ATO's employee superannuation guarantee
calculator and how much super you should get. If you have
a casual job, check out our article on super for casual workers.
You usually have the freedom to choose the super fund your
contributions are paid into. When you join a super fund, make
sure they have your tax file number so you don't pay
unnecessary tax or miss out on other benefits.
If you have more than one super fund account, you will be paying
administration charges and dealing with paperwork for each fund.
The extra charges can eat away at your super. Think about consolidating super funds,
that is, bringing all your super together into one fund to avoid
duplicated fees, and so that you don't lose track of your different
You can find lost super, check your active accounts and
consolidate funds by creating a myGov account and then linking it to the
ATO. For more information take a look at the ATO's webpage on
how to check your super.
Insurance through super
insurance through super is arranged by your super fund (such as
life and disability insurance). You will pay insurance premiums
from your super account, so it's important you know about the level
of cover you have and if it meets your needs.
Put your pay away and plan for new
If your pay is just going into your ordinary transaction
account, you could be missing out on earning better interest.
Consider putting some of your salary into a separate online savings
account with a high interest rate and low fees.
Once you're earning, it's easier to save and plan for big
purchases. Try to keep your bank balance healthy by setting some
goals and sticking to your budget.
Savings goals calculator
There may be new expenses to budget for when you start work.
These may include travel, work clothes, food , and other work
related expenses. Consider these costs and adjust your budget so
you can factor them into your spending.
Think about income
If you have people who depend on you financially, or have
financial commitments that depend on you earning an income, you
should consider getting income protection insurance. For
example, if you cannot work due to sickness or an accident, the
money you get from income protection insurance will help you
pay for food and bills.
Make the most of your pay packet: check you're
getting the right super and paying the right tax. Set some goals
and make your money work for you.
Last updated: 15 Oct 2015