As Benjamin Franklin famously stated, “…in this world nothing can be said to be certain, except death and taxes”.
Taxes are central to our society – in Australia, our taxes support government sector expenditure ranging from defence and public safety, to education and health, to social security and welfare, to transport and communication infrastructure, to our courts and legal services, and much, much more.
Roads and railways, hospitals and universities, schools and sporting facilities are some of the more obvious beneficiaries of taxpayer funds and can garner much of the focus at election time.
But did you also know that other essential services such as the Pharmaceutical Benefits Scheme, the CSIRO, Bureau of Meteorology, and the national broadcasters ABC and SBS are all heavily (if not completely) reliant on government funding that flows from taxes?
There are many different types of taxes, paid at a federal, state, and local level. There is income tax you pay once you earn more than $18,200 per year. GST paid on goods and services is a tax. So is paying stamp duty when you purchase a house, and vehicle registration to keep your car on the road each year.
In Australia we pay taxes as individuals and as corporations. Changes to taxes impacting on businesses can have knock-on effects on what research and development they can afford, where they base their operations, and even how many people they can afford to employ.
Even the smallest increases or decreases in taxes get a lot of attention.
For teenagers, the first three practical points to remember about tax are:
Apply for a tax file number (if you don’t have one already). You will need to give this to your employer when you start a job – even a weekend casual or part-time position.
When you start a job or start receiving Centrelink benefits, complete the Tax file number declaration form that your employer or Centrelink office will give you. This enables you to claim the tax-free threshold, which means the first $18,200 of your yearly income is not taxed.
Visit the ATO website and use the tool to determine if you need to lodge a tax return.
This article was provided by FBF partner and leading accountancy and advisory organisation, BDO in Australia.