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  • Tax: how it works and why we pay it

    What is tax?

    Tax is the money we collect on behalf of the government. You may need to pay tax if you get income from:

    • a job
    • Centrelink allowances and payments
    • running a business
    • other sources (like bank interest).

    Why we pay tax

    The money we collect pays for services such as:

    • health
    • education
    • defence
    • roads and railways
    • social security and other payments from Centrelink.

    How do I pay tax?

    If you work for an employer, they will take tax from your wage or salary and give it to us.

    If you have other income, such as business income or bank interest, you may have to pay the tax to us. If you need help you can contact us or a registered tax agent.

    Most people need to lodge a tax return each year to tell us how much:

    • income they earned
    • tax they paid.

    We use this information to work out if you have paid the correct amount of tax for the year.

    Next steps:

      Last modified: 30 Jun 2021QC 61176