New to tax and super

Why we have tax

The Australian Taxation Office (ATO) collects taxes for the Australian Government. The taxes we all pay fund community services, such as:

• health care
• education
• roads and train lines
• the Australian Defence Force
• welfare and disaster relief.

Having the services we all value depends on everyone paying the right amount of tax.

This animation was developed from a story by high school student Felicity Pollard.

Starting your first job

Congratulations! When you start working, you need to know if you are an employee or independent contractor.

You may also need to:

• apply for a tax file number (TFN) (it’s free)
• complete a TFN declaration for your employer.

If you are starting your own business, you will need to apply for an ABN (it’s free).

Your income

If you have an employer, they pay your salary or wage to you. They will also withhold any tax and send it to us. Your payslipsOpens in a new window will show how much tax is withheld.

If you earn income in other ways – such as through online activities, sharing economy, or interest from investments – you will need to include this income in your tax return. If tax is not withheld during the year, you can work out how much tax you should be putting aside using our:

• tax tables
• tax withheld calculator
• how much tax should I pay on a second jobOpens in a new window.

Claiming the tax-free threshold

If you're an Australian resident, the first $18,200 you earn is tax-free, this is known as the tax-free threshold. You can claim the tax-free threshold on the TFN declaration you give your employer.

If you receive income from more than one job, you generally only claim the tax-free threshold from one employer. A common mistake is to claim the tax-free threshold from multiple employers.

Any income you earn, whether from an employer, government agency or work you do under an Australian business number (ABN), counts towards your tax-free threshold.

In some situations, your employer will not withhold tax from your income because they don't expect you to earn over $18,200 from what they pay you throughout the year. You can ask your employer to withhold additional tax or enter into the PAYGI system to assist with setting aside extra tax.

If you have more than one employer in an income year, your combined income may be more than the tax-free threshold.

Superannuation

When you start your first job this is usually when you get started with super.

You can usually choose which super fund your employer makes payments to, they will give you a Superannuation standard choice form.

The YourSuper comparison tool is a simple way to compare MySuper products and help you choose a super fund that meets your needs.

From the time you get a super account it’s a good idea to regularly review it to make sure you are receiving the correct super from your employer and that everything is in order.

To help you do this and take control of your super, we have the super health check. It’s 5 simple yet important checks you can complete at any time but we suggest you do this each year at tax time when you are completing your tax return.

Medicare and private health insurance

Most Australians will pay the Medicare levy when they start earning income. You may get a reduced Medicare levy, or pay no Medicare levy at all, depending on your income or circumstances.

If you have private health insurance, you may be able to get some of your premiums back through the private health insurance rebate.

If you don't have private health insurance, you may also need to pay the Medicare levy surcharge on top of the Medicare levy, but it depends on your income.

Access ATO online services

You can manage your tax and super in one place by using our online services.

You first need to create a myGov account and link it to the ATO. We recommend using a Digital ID (such as myID) for secure and flexible access to ATO online services.

Lodging your first tax return

The income year in Australia runs from 1 July to 30 June. You need to lodge your tax return by 31 October. There are 3 ways you can lodge your tax return.

Your tax return works out your taxable income. Once you have lodged, we calculate how much tax you should pay on your taxable income, less the amount your employer has already sent to us. If your employer:

• withheld more than you owe, you will receive a refund
• withheld less than you owe, you will receive a tax bill to pay.

It's easier if you wait for your income statement to be marked as 'tax ready' and for your information to be pre-filled before you lodge your tax return. Those who don't wait often have their return held up in the system and need to amend their return when the information arrives.

The best time to lodge is from late July. By then, most of your relevant information will be pre-filled including the details from your income statement, bank interest, private health insurance, dividends, and government payments. Make sure your pre-fill information is correct and add any information that is missing.

There are a number of reasons you may receive a tax bill, and you may be able to avoid getting one in the future.

Access your income statement

At the end of the income year your employer will provide you with an end of year statement known as an income statement. Your income statement will show your tax and super information. You access your income statement through ATO online services.

Claiming deductions

You can claim some of your expenses as deductions in your tax return.

Deductions reduce your taxable income, which in turn reduces the amount of tax you need to pay.

You need to keep records that support any deductions you claim in your tax return. The myDeductions tool in the ATO app can help keep track of your:

• work-related expenses (such as vehicle trips)
• general expenses (such as gifts and donations).

Help to lodge

Help is available with lodging your tax return and other services through our free Tax Help program, if you earn around $70,000 or less a year and have simple tax affairs. If you are not eligible for Tax Help you may qualify for assistance from a National Tax Clinic program.

Study and training support loans

If you are entering higher education, an apprenticeship or other training program, you may be eligible for a study or training loan from the Australian Government to help pay for your studies.

Each year your loan will be indexed, increasing how much you owe. There are 2 ways you can repay your loan:

1. When your income is above the repayment threshold, you will make a compulsory repayment in your tax return.
2. You can make voluntary repayments at any time to reduce your balance faster.

It’s important that you let your employer know you have a study or training loan, so they can withhold the right amount of tax from your pay.

Protect your information

Scammers aim to take advantage of weak security and plan on you being distracted with everyday life.

To keep yourself safe:

• Stop – Never share your myGov sign in details and only share your TFN, or bank account details if you trust the person and they genuinely require your details.
• Check – Take a sec to check. Ask yourself could the message or call be fake? Is it really the ATO contacting you?
• Protect – Act quickly if something feels wrong or you've noticed suspicious activity on your ATO accounts.

Always be aware of what information you share. If a scammer gets your personal information they can use it to access your bank account, sign in to your myGov account, or steal money and commit fraud in your name.

If an interaction doesn’t feel right, don't engage. You should either:

• go to Verify or report a scam
• check our latest Scam alerts
• or phone us on 1800 008 540 to check.

 

Help and support we provide

We have help and support available to help you meet your tax obligations, this includes:

• ATO app – you can download the ATO app it's a simple and easy way to access and manage your tax and super on the go.
• Our free Work Ready CourseOpens in a new window to help you to:
  • understand the meaning of tax and super, how they work and why they are important
  • develop the skills to become work-ready and successfully navigate Australia's tax and superannuation systems
  • understand the responsibilities of businesses in relation to tax and super
• ATO CommunityOpens in a new window – answers to questions about tax and super. For information you can rely on, look for answers marked 'ATO certified response'.
• Tax and super information for:
  • People with disability
  • Aboriginal and Torres Strait Islander peoples
  • Other languages.