18 Aug 2019

Getting your first job is definitely one of the more exciting milestones in life. You get to make some new friends in an environment that isn’t school, doing work that (hopefully) isn’t maths – and you get paid for it. That sweet, sweet cash, all yours to spend on whatever you want.

But of course, there’s also a whole heap of boring, important stuff you need to wrap your head around first. Things like superannuation, sorting out a bank account and making sure the chicken nuggets go to the customer and not into your belly.

We’ve enlisted the help of our money expert mates Westpac to get a bit more info about one of these baffling concepts; copping your first tax return.

But first, what is tax?

Tax is basically a portion of your income that’s given to the government to help fund public services – things like healthcare, education, welfare and infrastructure.

In Australia, how much we get taxed depends on how much we earn, so if you don’t make that much money you won’t have to pay that much tax. There’s also a pretty nifty thing called the tax-free threshold, currently set at $18,200. This means you don’t have to pay any tax for the first $18,200 you earn throughout the year, and if you earn less than that amount you won’t have to pay any tax at all.

The next tax bracket is between $18,200 - $37,000 with a tax rate of 19%. This means you’ll pay 19c in taxes for every dollar you earn over $18,200. Earn more than $37,000 and you’ll enter the next tax bracket, which means you’ll get taxed a higher rate for every dollar over $37,000. Below are the official tax brackets.

Most people don’t have to worry about figuring all this stuff out because if you’re a casual, part-time or full-time employee, your employer will just take this money out of each pay, so you’ll hardly even notice you’re paying tax at all; this amount can be found on the pay slip itself.

So, what’s a tax return then?

Unfortunately, employers don’t actually know how much money you’ll earn over the year – they can only predict based on the amount you get for each pay period. Say you earn $400 one week. Your employer will then assume you’ll earn the same amount every week, which puts you at $20,800 for the year. Then they’ll tax you according to that tax bracket (which is 19%).

Thing is, those predictions are often inaccurate, especially for students with irregular hours and periods of not working. So generally, what you’ll find is that you’ve been taxed more than you needed to, which means at the end of the financial year you’ll get that money back in a nice lump sum through *drumroll* a tax return!

The financial year ends on 30 June but you have until 31 October to file your tax return. It’s compulsory to do so if you’ve earned an income throughout the year, but you’ll definitely want to get on it if you’re going to potentially be getting free money out of it.

How do I do my taxes then?

The best way to file your tax return is online through myTax. You’ll need your Tax File Number (TFN) handy – which you should have already organised before starting your job. If you can’t find or remember it, suss out your options here. Then you just have to create a myGov account which you’ll link to your tax records by calling 13 28 61. Once you’re logged into myTax, follow the prompts to fill out the form.

This year you’ll get an income statement from your employers through myGov. This is a summary of your income you’ve earned throughout the financial year and is needed to complete your tax return. A lot of this information will come pre-filled on your online form, which pretty much turns the whole process into a series of buttons you gotta boop.

You can also get an accountant to manage this for you, but this costs money and in the early stages of your working life it’s really quite simple to do it yourself. You can also file your tax return by filling out a paper form, but ain’t no one got time for that, not least the environment.

You can also claim work-related expenses as tax deductions if you paid for them yourself, weren’t reimbursed and have proof of the purchase. This includes things like uniform, tools, equipment and books. Click here for a full list of things you can claim. These deductions reduce your income that’s able to be taxed, effectively giving you more money in your tax return.

Speaking of more money, if you’re looking for somewhere to new to keep your delicious tax return, get yourself some more extra cash by opening a Westpac Choice Transaction account. They’re giving students and under 21s (who haven’t had a Westpac Choice account before) $50 cash for opening an account, all you’ve gotta do is make five eligible purchases and deposit $500 within 30 days of opening the account. Suss out the details over here.

This information is intended to be general in nature only and might not apply to your personal circumstances.

* Westpac is the promoter of the offer and the financial services provider. Fees and charges apply and may change. Visit westpac.com.au for full details, including what constitutes an 'eligible purchase', and to read the Terms and Conditions before deciding. © 2019 Westpac Banking Corporation ABN 33007 457 141 AFSL and Australian credit licence 233714. Year 13 has entered into an arrangement with Westpac to refer you to the offer contained in this article, and Year 13 receives a financial benefit from Westpac for referrals made under this arrangement.