tax and super: a beginner’s guide

There’s no way around it – tax and super can be confusing! But we’ve got you covered. Let’s run through the basics of tax and super, why they're important, and how to manage them.

Income tax

 

What is income tax & how does it work?

The government takes a portion of your income each year for shared services and infrastructure. For example, it pays for our roads, public transport and schools. It even helps with our low-cost medical system, Medicare.  

 

Do I need to pay tax? (And if so, how much?)

Yes. The chances are you will.  

You need to pay income tax as soon as you earn over $18,200 a year (which is roughly $350 a week). Remember you’re taxed on your combined income. So, if you have more than one job, your tax is based on everything you earn as one big sum. Other things can contribute towards your income total, like Centrelink or support payments.  

Usually, your boss will take care of your payments for you. You just need to provide one thing – your Tax File Number. 

What is a Tax File Number & how do I get one? 

Whenever you start a new job, you’ll be asked for your Tax File Number (TFN). This is a unique number that you keep for life. It helps the government track things like your earnings, superannuation and debts.  

It’s best to apply for a Tax File Number as soon as you can. The good news is it’s free (and easy) to get one.  

 

How do I lodge a tax return? 

You’ll need to lodge a tax return at the end of every financial year. You can link the ATO with your MyGov account and lodge a tax return online through MyGov. You can either lodge a tax return yourself or engage an accountant to do so on your behalf. 

A tax return is a way for the government to add up your income for the year so they can check how much tax you've paid. Your income statements are automatically sent to ATO and visible on the ATO link within MyGov. Basically, if you paid more than you need during the year, you'll get some money back. If you paid less, you'll need to pay a little extra.  

You’ll be glad to know that most people get some money back. Just be sure to lodge your tax return before 31 October so you don’t miss out. 

 

Superannuation

 

What is superannuation & how does it work?  

Just like tax, superannuation (or super) is money that employers are required to pay towards your retirement savings. Again, you don’t have to worry about making these payments yourself, your employer will do it for you. But it’s important to know how and when they pay it so you can keep track of these payments. For instance, some employers will include your super contribution on every payslip but make bulk contributions every three months.  

In addition to compulsory super contributions, you can ask your employer to pay part of your pre-tax pay into your super. This is called salary sacrificing and you’re only taxed 15% doing this. It means you can make contributions to your retirement with less tax.  

 

Who can get superannuation?  

Most people with a job need to join a superannuation fund. So, if you’re between 18 and 70 years old and earn more than $450 per calendar month, your employer should automatically be paying your superannuation. If you earn less than this, you could be exempt. Want to find out more? Learn about superannuation and who it applies to.

Quick tip: your employer must pay super regardless of whether you’re full-time, part-time or casual.

 

Super for u18s

Your boss needs to pay super on your behalf if you’re under 18 and work more than 30 hours per week. If you work less than this, then they don’t have to make contributions.

 

How can I keep track of my super?

Just look at your pay slips and your MyGov account to double check you’re getting the correct contributions. Don’t forget to pay attention to how your super fund is performing overall, too. You can use the ATO’s Super Comparison Tool to compare how your fund stacks up against others. Sometimes it can help to see a financial advisor/planner to really understand all the different supers and what you get with them (understanding that there will be a cost involved for this). 

 

What if I have multiple accounts? 

Staying across your super can sometimes be tricky. This is because when you move from job to job, you might change funds and lose track of who you are with. The problem with this is you get charged more for having multiple funds. That’s why it’s important to consolidate your superannuation funds using your MyGov account.   

 

 

Get support

If you're feeling overwhelmed, we're here to support you. If you're aged 15 - 25 and want to talk through your options, get free and confidential support from the Work and Study team and sign up for one-on-one support. You could also join one of our Work and Study peer-led group chats.

For support with your mental health and wellbeing, find your nearest headspace centre or access online and telephone support via eheadspace.

 

 

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Last reviewed July 2023.

Study Work Grow. (2023, June 8). Tax and young people

Australian Taxation Office. (2023, June 8). Tax file number.

Australian Taxation Office. (2023, June 8). Lodge your tax return online with myTax

Youth Central. (2023, June 8). Superannuation

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