Starting work

Make the most of your pay packet

When you start work, don't just rely on your employer to get your entitlements right. Here are some things you should do.

Get a tax file number

First things first: each time you start a job you must give your employer your tax file number (TFN) and bank account details.

Your employer will ask you to fill out a tax file number declaration form. Make sure you do, because if your employer doesn't have your TFN, your wages will be taxed at the top tax rate of 46.5%! 

If you need a TFN, contact the Australian Taxation Office (ATO) about  getting a tax file number.

If you're under 18 and at school, ask your teachers about the ATO's secondary school TFN program. It's the easiest way for you to get a 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 windfall page.

Smart tip

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 got a few jobs?

If you work part-time and receive Centrelink payments, or have a few jobs, you must state from where you will claim your $18,200 tax-free threshold for that financial year. You will have to choose from whom you claim the threshold 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 employer.

Case study: Anita checks her payslips

""Anita 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 46.5% - 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 industry award.'

Check your superannuation 

Smart tip

If you earn under $46,920 in 2012/2013, the government will provide a co-contribution for extra super contributions you make.

For details and rates ee 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 65.

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. Find out more about the Super guarantee and how much super you should get. If you have a casual job check out our article on super for casual workers.

Employer contributions calculator

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 would be eating 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 funds.

You can find lost super, check your active accounts and consolidate funds with the ATO's free SuperSeeker tool.

Put your pay away

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

Think about income protection

If you have people who depend on you financially, or you 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.


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Last updated: 14 Oct 2013

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