• Tax in Australia - what you need to know transcript

    Introduction

    Hello and welcome.

    If you are about to start a job or receive government benefits from Centrelink, this presentation will give you the information you need about tax in Australia.

    If you're living in Australia and earning money, you may have to pay tax to the Australian Government.

    The Australian Taxation Office (ATO) collects tax for the government.

    Generally you must pay tax on your income you get from:

    • working
    • a business
    • government benefits, such as Centrelink payments
    • income from investments.

    How much tax you pay depends on:

    • the income you earn
    • whether you are an Australian resident for tax purposes
    • whether you have a tax file number (TFN) - this is a personal identity number that you must keep secure.

    In general, you will be seen as an Australian resident for tax purposes if you:

    • have come to Australia and live here permanently
    • are an overseas student who has come to Australia to study and are enrolled in a course that is more than six months long
    • have been in Australia continuously for six months or more, work in the one job and live at the same place for most of that time.

    If you earn money from working, your employer will take tax out of your pay during the income year. This is how most people pay tax.

    The government uses tax money to provide valuable services to the community including:

    • hospitals
    • schools and universities
    • police
    • roads, railways and airports
    • government benefits and other help you may get.

    The government also gives Australian residents access to health care called Medicare. To help fund the scheme, resident taxpayers pay a Medicare levy.

    Further Information

    For more information, visit www.ato.gov.au or call 13 28 61 to ask about your personal tax.

    If you do not speak English well and want to talk to a tax officer, phone the Translating and Interpreting Service on 13 14 50 for help with your call.

    End of further information

    TFN

    If you're living in Australia and earning money or receiving Centrelink benefits, you may have to pay tax to the Australian Government.

    To follow Australia's tax laws, the first thing you should do is get a TFN.

    A TFN is a unique number the ATO gives to individuals and organisations so they can identify you and find records about you.

    Your TFN is yours for life, so keep it private and secure.

    Don't let anyone else use your TFN - even friends or relatives. Letting someone else use your TFN, selling it or giving it away can cause serious problems for you.

    Only give your TFN to people or organisations with a real reason for having it such as:

    • the ATO
    • your bank
    • your employer after you begin work - do not provide it on job applications.

    Keeping your TFN and other identity details secure helps prevent identity crime where criminals use other people's identity details to commit crimes.

    If your TFN is lost, stolen or misused, tell the ATO straight away by calling 1800 060 062.

    If you are migrating to Australia or hold a temporary resident visa that allows you to work in Australia, you can:

    • apply for a TFN at www.ato.gov.au - select 'Individuals'
    • call 13 28 61
    • visit an ATO or Centrelink shopfront to get a TFN application form to fill in.

    You'll need your TFN when you get a job. If you start work before you have a TFN, you have 28 days to get one and give it to your employer. If you don't have a TFN your employer may have to take extra tax out of your pay, so you will have less money for yourself and your family until you lodge your tax return at the end of the year.

    Scenario

    Azubuike
    Over there - they're cheap.

    Faraji
    Oh look Azubuike. I really need one of those. (looks at a car)

    Azubuike
    I bet you do. But did you know that if you're working and you don't have a tax file number, it can cost you?

    Faraji
    Why?

    Azubuike
    Because the boss will have to take tax from your pay at the top rate. So, you get less money in your pocket.

    Faraji
    But I need all the money I can get to buy a car.

    Azubuike
    Well if you don't have a tax file number you will not be able to lodge your tax return and then you may get in trouble with the ATO.

    Faraji
    How do you know all this stuff, Azubuike?

    Azubuike
    Khamisi and I got tax file numbers when he got his job last year.

    Faraji
    I have an idea. How about if I borrow your tax file number for when I start my job?

    Azubuike
    I cannot do that; I can't let other people use my tax file number. I would get in serious trouble. You need to get your own.

    Faraji
    Oh! How do I get a tax file number?

    Azubuike
    Khamisi and I applied for ours at the ATO. It was really easy.

    Faraji
    I will give them a call - or I might look at the internet on your computer.

    Azubuike
    It's easy. I'll help you.

    Further Information

    For more information about TFNs visit www.ato.gov.au or call 13 28 61 to ask about your personal tax.

    For more information about keeping your TFN safe, visit the identity crime page at www.ato.gov.au/identitycrime

    If you do not speak English well and want to talk to a tax officer, phone the Translating and Interpreting Service on 13 14 50 for help with your call.

    End of further information

    Starting a job

    If you earn money from working, your employer will take tax out of your pay during the income year and send it to the ATO. This is how most people pay their tax in Australia. The tax is spent on things we all need like education, hospitals, roads and other services.

    An income year is a period of 12 months that starts on 1 July and ends on 30 June the following year. Income years are also called financial years.

    When you start a job, your employer will ask you for your TFN to work out how much tax to take out of your pay.

    Your employer will also contribute money to your superannuation. Super is Australia's name for pension or retirement savings. If you are an employee, your employer must generally pay amounts called 'contributions', into a super account for you. They pay these contributions on top of your salary and wages.

    When you start a job, your employer will also ask you for your super fund details. A super fund is like a bank. You will generally have a choice of the fund you use. If you do not choose a fund, your employer will choose a fund for you.

    You can only withdraw your super money in certain circumstances; for example, when you retire or turn 65.

    If you spend money to earn income that is taxable, you may be able to claim this as a tax deduction.

    Tax deductions reduce the amount of income you have to pay tax on.

    You may be able to claim a tax deduction for money you spend on:

    • uniforms, safety clothing or tools and equipment you need for work
    • car or travel expenses while doing your job
    • gifts or donations to approved charities or fund-raising organisations.

    Keep any tax invoices or receipts you get when you spend this money for your records.

    You must tell us your income and deductions on a tax return form so you pay the right amount of tax. You have to fill in a tax return once a year and send it to the ATO.

    Scenario

    Faraji is in the boss' office and she is smiling.

    Boss
    Well Faraji, I am impressed with your application and interview. I would like to offer you the job. We have a big order to deliver and we sure could use your skill.

    Faraji
    That's great, thank you for the opportunity Ms Trinh, I won't let you down.

    Boss
    There are some forms we need to complete and I need some information that I can't get from your job application. Faraji, do you have a tax file number?

    Faraji
    Yes, Ms Trinh, I received it from the ATO last week.

    Boss
    Great, I know this number must be kept secure at all times, but as your employer, I need you to fill out this form - it is a Tax file number declaration form that will help me set up your pay.

    Boss
    And you need to read and complete this form about choosing a super fund. You have to work out if our industry super fund is the best one for you, or you can choose a different fund.

    Faraji
    Can I find out more about super before I choose?

    Boss
    Yes, you can take these forms with you.

    Faraji
    Do I need to buy a uniform to wear?

    Boss
    No, we will give you a uniform but you need some safety boots - keep the receipt when you buy them because you can claim the cost as a tax deduction.

    Faraji
    Thanks, Ms Trinh. When can I start?

    Boss
    Can you come in on Thursday? There is some safety induction training…

    Further Information

    For more information, visit www.ato.gov.au or call 13 28 61 to ask about your personal tax.

    If you do not speak English well and want to talk to a tax officer, phone the Translating and Interpreting Service on 13 14 50 for help with your call.

    End of further information

    Tax returns

    You must tell the ATO your income and deductions so you pay the right amount of tax.

    You do this every year through a tax return. A tax return is the form you fill in with all of your tax information for the financial year.

    This means that you are responsible for telling the ATO how much income you received and the deductions you have on your tax return.

    You must list all your income in your tax return, including any overseas or investment income.

    To prepare an accurate tax return and support the claims you make, you need to keep careful records.

    After the end of each financial year (30 June), your employer will give you a 'payment summary' which shows how much you earned and how much tax they took out of your pay.

    You use your records and the payment summary details to complete and lodge a tax return by 31 October every year.

    Money is returned to you as a refund if:

    • you have not earned over a certain amount
    • your employer took more tax from your wages than you needed to pay.

    If you haven't paid enough tax, the ATO will send you a bill for the money you still owe, which you must pay.

    The easiest way to prepare and lodge your tax return is by using the free e-tax service. It's safe, secure and easy - and millions of people use it. In most cases, e-tax returns are processed and any refund is paid to you within 14 days. You can download e-tax from www.ato.gov.au

    Trained Volunteer's run a free Tax Help service for low income earners from July to October each year. They help you complete and lodge your tax return. Phone 13 28 61 to see if you can use this service and for the contact details of your nearest Tax Help centre.

    You may choose to pay a tax agent to help you prepare and lodge your tax return. You should only use a registered tax agent. Only a registered tax agent can charge a fee to prepare and/or lodge your tax return. To find out if a tax agent is registered, visit the Tax Practitioners Board website at www.tpb.gov.au

    Even if someone helps you complete your tax return, including your tax agent, it is your responsibility to make sure the information in your return is right.

    Scenario

    Azubuike
    Hey, Faraji, I thought you would be out driving around in your new car.

    Faraji
    I wish I could. I need to do my tax return and I don't know where to start.

    Azubuike
    I did mine last week., I used e-tax.

    Faraji
    E-tax
    ? What's that? Wait, let me guess, it's something on your computer from the internet, right?

    Azubuike
    Yes, it is software from the ATO that you can use to complete and lodge your tax return for free, whenever you want. I found it on the ATO website. They say millions of people use it.

    Faraji
    And you tried it? How was it?

    Azubuike
    It was easy. The program worked out most of the amounts for me and it downloaded a lot of information I needed for my return.

    It also gave me tips on things I could claim as deductions and gave me links to more information.

    I liked the way it asked me questions about all areas of the tax return and made sure I got it right the first time.

    I also liked that it told me I will be $417 richer in two weeks!

    Faraji
    Wow that sounds great… Hey Azubuike, can I use your computer?

    Azubuike
    I'm sorry my internet is not working.

    Faraji
    Oh no! How am I going to do my tax now?

    Azubuike
    Well, you could try the Tax help volunteers at the community centre - you know the one near the supermarket? It's a free service but you need to make an appointment.

    Faraji
    Okay, that sounds great. Let's phone up and see if I can get some help from them.

    Azubuike
    OK, but then we need to go shopping and I'm driving.

    Further Information

    For more information, visit www.ato.gov.au or call 13 28 61 to ask about your personal tax.

    If you do not speak English well and want to talk to a tax officer, phone the Translating and Interpreting Service on 13 14 50 for help with your call.

    End of further information
    • Last modified: 11 Oct 2012QC 22050