Paying tax

Tax is something we pay to the government to contribute to the things that keep our community running. Taxes pay for things we all have access to like parks, playgrounds, schools, roads, hospitals and fire departments.

Once you start earning a certain amount of money you start paying your share of income tax.

Paying your share

You may not need to pay tax when you first get a job. That’s because you may earn under the ‘tax-free threshold’. What that means is the government has decided if you earn less than a certain amount, then you don’t need to pay any tax.

As you get older and start to earn more money, you’ll start to pay tax, and the more you earn the more you’ll pay.

The Australian Taxation Office (ATO) website shows you what the thresholds are and how much tax you pay depending on your income:

Taking tax out of your pay

If you are earning over the tax-free threshold, the good news is your boss will usually figure out how much you need to pay. There is a system in Australia called ‘Pay As You Go’ (PAYG). Tax is ‘withheld’ meaning it’s put aside every time you get paid, rather than sending you a big bill at the end of the financial year.

Your payslip will tell you how much you’re paying in tax.

Read more about payslips

The taxation system is complicated and not everyone understands it. As a teenager it will be pretty simple for you, though. When it comes to what you get paid there are 2 numbers: ‘Gross’ and ‘Net’.

  • Gross is the money your employer pays you before tax is taken out. This will be the biggest number on your payslip. Your boss will withhold a percentage of that money and pay it to the government.
  • Net is what’s left after tax and yours to save and spend.

Your boss pays your tax bill for you through PAYG and there’s nothing for you to do until you do your tax return at tax time.

Read about submitting a tax return

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