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When you’re earning an income in Australia, you’re required to pay Income Tax to the Australian government.

Income tax.

The government uses this money to provide services such as healthcare, education, social security, and so on. Income tax is calculated on how much income you earn in a year and is taken out of your wages each pay day.

The Australian Taxation Office.

To keep track of your income and tax payments you will need a Tax File Number (TFN) which you can get from the Australian Taxation Office (ATO).

All you need to do to get a TFN, is apply online or complete the paper application form and send it to the ATO with certified copies of identification documents, or by lodging it at Centrelink or some Australia Post offices. You can get more information about getting a TFN on the ATO website. 

Your annual payment summary.

In Australia, the financial year ends on June 30. Shortly after that date, your employer(s) is required to provide a payment summary which sets out the amount you have been paid during the year and the amount of income tax that has been withheld from your pay.

Lodging a tax return.

Each year, you’re required to lodge a tax return with the ATO to let them know the income you’ve received. You need to include everything, including interest on bank accounts and dividends received, on your tax return, as well as the amount of tax you have already paid. For further information on the income you must declare, visit 

On your tax return you’re also entitled to claim deductions, which may reduce the amount of tax you pay.

Keeping tax records.

You need to keep records throughout the year to support the information you provide in your tax return. The tax office will review your tax return and advise the amount of income tax you are required to pay. This is then compared with what you have already paid throughout the year from your pay to determine whether you need to pay an additional amount or if you are eligible for a refund.

For more information on lodging a return, visit the ATO website

This information is general in nature and has been prepared without taking your objectives, needs and overall financial situation into account. For this reason, you should consider the appropriateness for the information to your own circumstances and, if necessary, seek appropriate professional advice.

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Davidson Institute

Whether you’re a budding business, dedicated community group or curious individual, our financial education resources are designed to help you feel more money confident. Powered by Westpac, the Davidson Institute is here to help you work towards the financial future you want.

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