Australian Taxation System
Understanding tax, Tax File Numbers, and your responsibilities as a young worker
Tax is money that the government collects from people who earn income. This money is used to pay for public services like schools, hospitals, roads, police, and welfare support. Everyone who earns income in Australia must pay tax according to the law.
Why Do We Pay Tax?
Taxes fund essential services that benefit everyone in the community. Without taxes, the government couldn't provide healthcare through Medicare, build infrastructure, support people in need, or maintain public safety.
A Tax File Number (TFN) is a unique number issued by the Australian Taxation Office (ATO). You need a TFN when you start work. It's free to apply for and stays with you for life.
✓ How to Apply
Online at ato.gov.au - completely free
⏱ Processing Time
Usually 28 days
🔒 Keep it Safe
Only share with employer or bank
⚠️ Without TFN
Employer withholds tax at 47%
In Australia, you don't pay tax on the first $18,200 you earn in a financial year (July 1 to June 30). This is called the tax-free threshold. If you earn less than $18,200 per year (about $350 per week), you won't pay any income tax.
📊 Example:
Sarah is 16 and works at a café on weekends. She earns $15,000 for the year. Because this is below $18,200, Sarah won't pay any income tax. However, her employer may still withhold some tax from each pay. Sarah can get this back when she lodges her tax return.
Good to Know
Even if you earn under the threshold, you should still lodge a tax return to get back any tax that was withheld from your pay.
If you're under 18, special tax rules may apply depending on where your income comes from. However, most young people earning money from a job (employment income) are treated the same as adults and get the tax-free threshold.
Taxed at Normal Rates
Wages from your job, Centrelink payments, your own business income
Taxed at Higher Rates
Investment income from parents, trust distributions, passive income
Being paid "cash-in-hand" or "under the table" is illegal in Australia.
"Cash-in-hand" or "paid under the table" means being paid in cash without any official records, tax being withheld, or proper employment documentation. Some employers may offer this to avoid paying tax, superannuation, and other entitlements. This is against the law.
Why is this dangerous for you?
- No WorkCover Insurance: If you are injured at work, you will NOT be covered by WorkCover (workers' compensation insurance). This means you could face enormous medical bills, receive no income while recovering, and have no legal protection if you are permanently injured on the job.
- No Superannuation: Your employer won't be contributing to your super, robbing you of retirement savings and the power of compound interest.
- No Legal Protections: You won't have access to Fair Work protections, including minimum wage guarantees, leave entitlements, or unfair dismissal claims.
- You Could Be Penalised Too: Even as the employee, you have an obligation to declare all income. Failing to do so can result in penalties from the ATO.
- •Apply for your TFN online at ato.gov.au - it's free and takes about 28 days
- •The first $18,200 you earn per year is tax-free
- •Without a TFN, your employer must withhold tax at the highest rate (47%)
- •Income from a job is taxed at normal rates for under 18s
- •Always lodge a tax return to get back any overpaid tax
- •You may need to lodge a tax return even if you earned less than $18,200 if your employer has withheld tax from your pay - this is how you get that money back
- •If you have more than one employer, you can only claim the tax-free threshold with one employer. It is recommended you choose the employer who pays you the most to claim the tax-free threshold with
- •Never accept cash-in-hand payments - it's illegal and leaves you without WorkCover, super, or legal protections
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