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A high school student’s guide to understanding tax

Feeling a bit confused about tax? You’re not alone, but we’re here to make it easy for you. We’ve spoken directly to the ATO, and they’ve provided us with a handy guide for high school student who might be new to the tax system. So if this is you, you’re in the right place.

Tax for high school students

As a student, you probably don’t spend much time thinking about tax. If you have a part-time or casual job though, it’s time to make sure you understand the ins and outs of why tax might apply to you.

In this article, we’ll take you through some important information and tips on how to lodge your tax return.

Why does the ATO collect tax?

The Australian Taxation Office (ATO) collects tax to fund essential community services, such as:

  • Healthcare
  • Education
  • Emergency services
  • Roads and train lines
  • Welfare and disaster relief

Chances are you use these services yourself – and your quality of life would go down if these services weren’t available to the wider community.

Everyone with an income over a certain threshold needs to pay tax, which means there’s only so much you can earn before you cross that limit and become taxable. We’ve made a list here so you can see the different tax free threshold amounts according to which country you’re in.

The good news though (depending how you look at it) is that the more money you earn the more tax you have to pay. As a result, if you’re earning a lower rate – say, if you’re a student working part time – the amount of money you need to pay as tax will also be lower.

So, what else do you need to know about tax?

Your tax file number

Your tax file number (TFN) is your personal reference number in the tax and superannuation systems. It’s free to apply for a TFN, and your TFN is yours for life, even if you move to another country, change jobs or change your name. You don’t have to have a TFN but without one you pay more tax. You also won’t be able to apply for government benefits or lodge your tax return electronically.

Your TFN is one of the most important parts of your identity, so make sure you keep it secure. You should not share it with anyone except:

  • The ATO
  • Services Australia
  • Your bank
  • Your employer
  • Your super fund
  • Your registered tax agent

Applying for a TFN

How you apply for a TFN depends on your circumstances, but it’s completely free to apply for a TFN with the ATO. To apply for a TFN online you will need to:

  • Be 15 years or older
  • Have an Australian passport
  • Be an Australian citizen (which means you were either born here, or have a citizenship certificate)
  • Have at least one other Australian identity document (e.g. driver’s licence)
  • To set up a Strong myGovID

If you don’t have a passport or are under 15 years old, you can use one of the other application options.

If you’re struggling to set up your TFN, consider asking a trusted adult for help. Remember, they’ve had to do this before too.

Lodging your return

You’ll lodge your tax return annually – yes, you’ll need to do this every year if you’re earning over the tax limit we talked about earlier.

You can use a registered tax agent or lodge it yourself. If you’re lodging your own tax return, it’s due by 31 October every year.  If you plan to lodge through a tax agent you usually have longer to complete your return, but make sure you contact them before 31 October.

If you choose to lodge your own tax return, lodging online with myTax is easy, safe and free. To use myTax, you need to have a myGov account, which you can link to the ATO. Once linked, you can use myTax simply by clicking through to the ATO in myGov, then click Prepare to start your tax return. If you have simple tax affairs, your return should be processed in around two weeks.

You can check if you need to lodge a tax return using ATO’s Do I need to lodge tool. Even if you don’t need to lodge a tax return, once you have a TFN you need to tell the ATO if a tax return is not necessary. You can do this by completing a non-lodgment advice, which can be done through ATO online services via myGov.

What income should I declare?

You must declare all the income you receive from your job, government payments, investments, business and foreign income.

The ATO usually receive this information from your employers and financial institutions, but you will need to check to make sure it is complete and correct. You may also need to enter some of your income manually.

What are deductions and how do I claim them?

If you spend money on things to do your job, you may be able to deduct these from your income on your tax return. These are called deductions and might include items like protective clothing or other equipment.

To claim a deduction for a work-related expense:

  • you must have spent the money yourself and were not reimbursed
  • the expense must directly relate to earning your income
  • you must have a record to prove it (usually a receipt).

If the expense was for both work and private purposes, you only claim a deduction for the work-related part.

Record keeping

If you claim work-related deductions, you must have records or be able to show how you calculated your claims. Keep your records for five years from the date you lodge your tax return. Keeping track of your records on the go is easy with the myDeductions tool in the ATO app.

Car expenses

You can claim a deduction for the cost of using your own car while performing your duties. This includes travel between different work locations, including for different employers.

You generally can’t claim the cost of trips between home and work, even if you live a long way from your usual workplace or work outside normal business hours, as these are private in nature.

Clothing expenses

You can’t claim the cost of buying, hiring, repairing or cleaning conventional clothing you bought to wear for work, even if your employer says this is compulsory or you only wear it when you are at work.

‘Conventional clothing’ is everyday clothing worn by people regardless of their occupation – for example, business attire worn by office workers, black pants and a white shirt, or jeans or drill shirts worn by tradespeople.

You can claim the cost of buying, hiring, repairing or cleaning clothing if it falls within one of these categories:

  • Occupation-specific
  • Protective
  • Compulsory uniforms
  • Non-compulsory uniforms (registered with AusIndustry).

Make sure you keep records of your clothing and laundry expenses, such as receipts or a diary, to prove your claims. You can’t claim the cost of the item if your employer pays for or reimburses you for the expense.

ATO app

You can keep on top of your tax and super with the ATO app. By downloading this, you can quickly access your personal tax and super information in one place. Download it from the Google Play Store or Apple App Store.

Need more info?

The ATO is there to help you. If you need more information you can check out their New to tax and super page, ask a question on ATO Community or contact the ATO.

You could also check out their handy Get your tax right the first time poster.

You can find lots more info and advice on all things financial on our website here.

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