Our role
We are the Australian Taxation Office (ATO). Our role is to manage the tax, superannuation (super) and registry systems.
Taxes pay for services and infrastructure, such as public health and transport. This benefits all Australians.
We want to make tax and super as easy as possible.
On our website you'll find information about:
- how the tax and super systems work in Australia
- studying (for overseas students)
- getting a tax file number (TFN) and starting your first job
- tax, super and registration for people starting their own business
- lodging your tax return
- growing and keeping track of your super for your retirement.
Tax: how it works and why we pay it | ||
Super: what is it and why is it important | ||
See our glossary of common tax and super terms.
If you don't understand this information, you can talk to a tax agent or contact us.
How tax works and why we pay it
What is tax
Tax is the money we collect on behalf of the government. You may need to pay tax if you get income from:
- a job
- Centrelink allowances and payments
- running a business
- other sources (like bank interest).
Why we pay tax
The money we collect pays for services such as:
- health
- education
- defence
- roads and railways
- social security and other payments from CentrelinkExternal Link.
How do I pay tax?
If you work for an employer, they will take tax from your wage or salary and give it to us.
If you have other income, such as business income or bank interest, you may have to pay the tax to us. If you need help you can contact us or a registered tax agent.
Most people need to lodge a tax return each year to tell us how much:
- income they earned
- tax they paid.
We use this information to work out if you have paid the correct amount of tax for the year.
If you have paid too much tax, you will receive a refund. If you haven't paid enough tax, you will receive a tax bill which you will need to pay in full and on time to avoid interest charges.
Studying in Australia and tax
If you are studying in Australia for 6 months or more, you may be considered a resident for tax purposes (tax residency). This is different to being a resident for migration purposes.
Being a resident for tax purposes means:
- your income tax rate is the same as Australian residents. This is generally lower than the tax rate for foreign residents.
- you are entitled to the benefits of the Australian tax system, such as
- the tax-free threshold
- tax offsets.
For more information see:
Starting your first job in Australia
There are things you need to know before starting your new job.
Get a tax file number before you start working
Your tax file number (TFN) is your personal reference number for our tax system. You should apply for your TFN before you start work or soon after. If you don't have a TFN to give to your employer, you will pay more tax.
It is free to get a TFN.
Keep your TFN safe
You keep the same TFN for your whole life, even if you change your name, change jobs or move interstate or go overseas.
Don't let anyone else use your TFN – not even friends or relatives.
Never give your TFN in a job application or online. You should only give your TFN to your employer after you start working for them. This is done by completing a Tax file number declaration form.
For more information see Keep safe from scams.
When you start working
Once you start working there are a few thigs you need to know about and do.
Complete a tax file number declaration
Your employer will ask you to fill out a Tax file number declaration form to tell them your personal information and your TFN.
Your employer uses this declaration to work out how much tax you need to pay.
You have 28 days to provide the declaration to your employer. If you don't, they will have to take out more tax from your pay.
How much tax you will pay
Your employer will deduct tax from your pay and send it to us. This is called 'pay as you go withholding'.
The amount of tax you pay depends on:
- whether you are an Australian resident for tax purposes
- how much income you earn
- whether you have a TFN.
Every year most people need to complete an income tax return and lodge it with us.
Superannuation
Superannuation, or 'super', is money that your employer pays on top of your regular income into a super fund that you can choose. You are also able to contribute to your super. Your super builds up over your working life. You use your super money to live on when you retire from work.
For more information see Super: what is it and why is it important.
Getting paid in cash
Some employers prefer to pay you in cash instead of into your bank account. This is okay if they:
- take the right amount of tax from your pay and give it to us
- give you payslips showing how much tax you have paid
- pay the right amount of super into your super fund.
If they don't do these things, you could be getting less pay and super than you should.
For more information see Receiving cash for work you do.
Sharing economy
If you make money through the sharing economy (also known as the gig economy) income tax and Goods and Services Tax (GST) may apply to your earnings. This includes:
- renting out all or part of your home through platforms such as Airbnb, Vrvo or FlipKey
- sharing assets including cars, caravans, car parking and storage spaces and personal belongings through platforms such as Camplify, Uber Carshare, and Toolmates.
- providing creative or professional services including graphic design, creating websites, and odd jobs like deliveries and furniture assembly through platforms such as OneFlare, Mad Paws and Airtasker.
Ride sourcing income, earned through platforms such as Uber, Didi, Shebah or GoCatch, is subject to income tax and GST. All ride-sourcing drivers need to have an Australian Business Number (ABN) and be registered for GST.
If your earnings are included in your tax return, you may also be entitled to a deduction for expenses incurred relating to the sharing economy.
For more information see Sharing economy.
Income from more than one job
If you are an Australian resident for tax purposes for all or part of the financial year, you may be able to claim the tax-free threshold. This means that your employer will withhold less tax from your income.
If you have more than one job at the same time, you should only claim the tax-free threshold from one employer to avoid receiving a tax bill when you lodge your tax return. Generally, you should claim the tax-free threshold from the job which pays you the highest income. However, if you're certain your total income for the financial year from all your employers will be $18,200 or less, you can choose to claim the tax-free threshold from each payer.
When you lodge your tax return, you will need to report all of your income and how much tax has been withheld. We will calculate your total taxable income, and make sure you have paid the right amount of tax.
Employee or independent contractor
Being an employee is different from being an independent contractor.
An employee works in another person's business, whereas an independent contractor is usually self-employed and running their own business.
Some employers may incorrectly treat you as an independent contractor or encourage you to get an ABN to try and avoid their responsibilities.
Only people who run a business need an ABN. If your employer is incorrectly paying you as an independent contractor you could be missing out on things like:
- sick leave
- holiday pay
- super
- work cover (insurance).
For more information see Working as an employee.
Working as an independent contractor
Independent contractors have different tax and super obligations to employees. You can work as an independent contractor either as an individual (sole trader) or by working in your own company, partnership or trust. You might even call yourself a sub-contractor or 'subbie'.
As an independent contractor, you're starting or running your own business. Therefore you need to pay your own tax.
You may also need:
- an ABN
- to register for GST
- to know if your income is subject to the rules for personal services income
- to lodge a taxable payments annual report (TPAR)
- to pay super guarantee for some or all of your workers
More than that, as an independent contractor you:
- don't receive paid leave; for example, sick, annual, recreation or long service leave
- are responsible for fixing your own mistakes at your own expense, and may need to pay costs if your work causes damage or injury
- have the right to delegate or subcontract the work to others
- bring to the job all or most of the things (tools and equipment) you need to do your work
- have to buy or hire your tools of trade or any equipment you need to do the work
- can do the work in any way you like as long as you complete the work to an agreed standard, or to the specific terms in your contract or agreement.
Workplace rights and obligations
All people working in Australia have the same rights and protections at work. Minimum pay rates and workplace conditions are set by Australian law.
The Fair Work Ombudsman can give you information and advice about your workplace rights and obligations. They have this information in different languages.
For more information see Fair Work Ombudsman – Language helpExternal Link.
Starting your own business in Australia
When you are starting your own business you will have tax obligations. You may be eligible to claim some deductions for business expenses to reduce your tax.
If you employ people to work for you in your business, you have to pay tax and super for them.
If you aren't sure what you need to do, ask a registered tax agent or contact us for help.
Before you start your business
You need to know if you are in business. We have information available to help determine this.
If you're in business, you have legal requirements such as:
- telling us how much income you've earned
- keeping accurate and complete records of your business transactions
- lodging and paying your tax obligations on time.
Choosing your business structure
There are 4 main business-types in Australia:
- sole trader
- partnership
- company and
- trust.
These are called business structures.
Each structure has different tax and reporting rules. These affect how much tax you pay and what happens if you get into debt. You need to understand these rules before you choose your business structure.
Getting your business started
Registering your business
When you start a business you may need:
- an ABN
- a TFN, (if you are a sole trader, you use your individual TFN for your business and if you choose a different structure, you will need to apply for a TFN).
Depending on how much money you make or whether you have employees, you may also need to register for:
- GST
- pay as you go (PAYG) withholding
- fringe benefits tax (FBT).
Getting an ABN
An ABN is a unique number for your business to use when dealing with other businesses, clients, government, and the ATO.
Not everyone is entitled to an ABN. You might need one if you are running a business.
If you have an ABN, you must put it on your invoices. If you don't, other businesses will keep more tax than usual from any payments they make to you and send that tax to us.
It is free to get an ABN.
Registering for GST and other taxes
You may need to register for GST and other taxes, depending on the type of business you're running.
For more information see Registration.
Paying your workers
If your business has employees or independent contractors, even if they are family, there are some extra things you need to do.
Paying employees
When you hire employees you need to make sure you are fulfilling tax and super obligations.
TFN declaration
On the first day an employee starts working for you, you must ask them to fill out a TFN declaration form. If they don't, you will have to take tax from their pay at the highest rate and send it to us.
For more information see Tax file number declaration.
PAYG withholding
When you have employees, you must take tax from their pay and send it to us. This is called pay as you go (PAYG) withholding.
For more information see PAYG withholding.
Paying super
When you have employees, you must pay super contributions for eligible employees. You send this money to their super fund. This is called the 'super guarantee'. You must pay your employees' super in full, on time and to the right fund.
For more information see Super for employers.
Single touch payroll (STP)
Single Touch Payroll means you need to tell us your employees' payroll information each time you pay them. You need to report:
- salaries or wages paid
- tax withheld
- super contributions
When and how you report, depends on how many employees your business has.
You can get special business software that will help you report this information to us. There are free and low-cost software products.
For more information see Single Touch Payroll.
Paying independent contractors
If you hire an independent contractor to work for your business, there are some different tax and super rules. It's important to understand the difference between employees and independent contractors.
In certain circumstances, you must pay superannuation for independent contractors who are deemed to be employees for superannuation purposes.
For more information see Difference between employees and independent contractors.
Reporting and paying tax
If you run a business, you will need to pay tax on money your business earns. You will also need to pay money you collect on behalf of the government and your employees. The type of tax return you lodge depends on your business structure. You may also need to lodge activity statements. It is important you lodge and pay before the due dates.
Your tax return
Your tax return tells us:
- how much money your business has made
- how much tax you've paid.
With a business you must lodge a tax return each year.
If you have set up your business as a sole trader, you will use your individual tax return to lodge your business tax information.
If you have set up your business as a partnership, company or trust, you use a different type of tax return just for your business.
For more information see:
Business activity statements
Business activity statements (BAS) are different to tax returns. Your BAS will help you report and pay taxes such as:
- goods and services tax (GST)
- pay as you go (PAYG) instalments
- PAYG withholding.
When you register for an ABN and GST, we'll automatically send you a BAS when it is time to lodge.
Even if you have nothing to report in your BAS, you will need to lodge a 'nil' BAS by the due date.
It's important to lodge and pay your BAS on time. You may need to do this quarterly, monthly or annually, depending on your reporting and payment cycle. If you're struggling to pay, contact us or your tax professional for help getting back on track before your next lodgment.
For more information see Business activity statements.
Claiming deductions and concessions
If you spend money on expenses for your business, you may be able to claim a tax deduction. This means you pay less tax.
Some business may also be eligible for tax concessions, offsets or rebates.
For more information see:
Preventing a tax bill
If you receive a tax bill, you need to pay in full and on time to avoid general interest charges.
There are some things you can do to set yourself up for success and help prevent a tax bill. When you run a business, there’s money belonging to you and money you collect on behalf of the government and your employees. You should set up a separate bank account for:
- GST
- PAYG withholding
- your employees' super guarantee.
Using a separate bank account will allow you to track your finances and help you pay your tax in full and on time. Don't use this for your business' cash flow.
Keeping business records
Keeping records is a legal requirement and is essential to running your business properly. You must keep some records for at least 5 years. Keeping accurate records also helps you to:
- know if your business is making a profit or loss
- keep track of your income and expenses
- show banks or lenders your business finances.
Lodging your tax return
Every year, most people need to complete a tax return and lodge it with us. In your tax return you tell us about all your income and deductions for the year.
We use this information to work out if you need to pay extra tax or if you need to get money back (a tax refund).
Tax returns cover the financial year from 1 July to 30 June. If you are doing your own tax return, you need to lodge it with us by 31 October.
If you want free help filling out your tax return and you are on a low income, our trained Tax Help volunteers may be able to help you.
If you are using a tax agent, you need to contact them before 31 October. You should check that your tax agent is registered.
Who needs to lodge a tax return
Most people need to complete a tax return and lodge it with the ATO every year. Reasons you need to lodge a tax return may include if you:
- had any tax taken out (withheld) from income you received
- are an Australian resident and your taxable income was more than the tax-free threshold ($18,200)
- want to claim any tax deductions
- pay or receive child support
- received any business, investment, or foreign income
- are leaving Australia or live overseas and have a study or training support loan.
If you aren't sure, we have a tool to help you.
Why do I need to lodge a tax return?
The ATO needs to know how much money you earned (income) during the financial year and what deductions you can claim. This information tells them whether you need to pay extra tax (a tax bill) or you need to get money back (a tax refund).
A financial year is from 1 July to 30 June.
When do I need to lodge my tax return?
If you’re doing your own tax return, you need to lodge it by 31 October every year.
If a registered tax agent is helping you with your tax return you need to contact them before 31 October.
How can I lodge my tax return?
If you’re doing your own tax return you can lodge it online with myTax.
If you’re using a registered tax agent, you should make an appointment to talk with them.
What information do I need to lodge my tax return?
You’ll need your:
- TFN
- bank account details in case you’re owed money back
- income – to prove any money you made
- income statements from all your employers
- payment summaries from Centrelink
- deductions and expenses – to prove any deductions you’re claiming
- receipts for work-related expenses, donations or gifts
If you’re lodging your tax return online using myTax, you’ll need to create a mGov account and link to the ATO.
Employers, banks and other businesses such as health funds give the ATO details about the people they work with. If you wait until late July, the ATO includes these details in your tax return for you. This makes lodging your tax return quicker and easier. You will need to check the information is correct and add anything that is missing.
What income do I need to include?
You must include all the income you receive during the financial year. That means money you have earned from all your jobs, including:
- full time
- part time
- casual or odd jobs
- self-employment
- cash jobs.
You must also include money you earned in other ways, including:
- interest from bank accounts
- government payments (for example, from Centrelink)
- owning a rental property
- overseas income and investments
- share market dividends
- distributions from partnerships and trusts
No matter how you earn it, remember to include it in your tax return.
For more information see Income, deductions, offsets and records.
What deductions can I claim?
You can claim deductions for some expenses related to your job. Common deductions include:
- car, transport and travel expenses
- tools, computers and items you use for work
- clothing and laundry expenses
- working from home expenses
- self-education expenses
For more information see Deductions you can claim.
You must be able to show records (for example receipts), for any deductions you claim. You need to keep these records for at least 5 years. The ATO may ask you to show these records at any time.
What happens after I lodge?
Most tax returns lodged online are processed within 2 weeks. If your return needs to be manually processed it may take longer. You can check the status through your myGov account. After your tax return has processed, the ATO will send you a notice of assessment to your myGov inbox. It will show if you get a refund or if you have a tax bill to pay.
If you receive a tax bill, pay it by the due date on your notice of assessment.
Paying your tax bill
The ATO offers different payment methods to pay your tax bill. The easiest and most secure ways to pay are with BPAY® or our online services.
If you can't pay your tax bill in full and on time, there are support options available. You may be able to set up a payment plan using our online services. Repayments for payment plans should be completed within the shortest possible timeframe to help reduce interest charges. If you need additional support, contact us or your tax professional before the due date.
Why super is important
Superannuation, or 'super', is money set aside during your working life for when you retire. Super is money paid by your employer, on top of your regular income, into a super fund that you can choose. You are also able to contribute towards your super.
Super is important because the more you save, the more money you will have when you retire. It could be one of the biggest assets you'll accumulate in your lifetime.
There are age limits for when you can access your super. You can withdraw your super when you:
- reach preservation age and retire
- satisfy an early release requirement, or
- turn 65 (even if you haven't retired)
Be wary of anyone offering to help you withdraw your super early. It may be illegal or a scam.
If you were working in Australia on a temporary visa and you go home, you may be able to access your super. This is called as a Departing Australia superannuation payment (DASP).
For more information see:
- Your superannuation basics
- Illegal super schemes – beware of offers to withdraw your super early
- Departing Australia superannuation payment (DASP)
Keep safe from scams
Scams are designed to trick you into:
- giving away your personal information (such as your TFN, myGov sign in credentials or bank account details)
- paying money.
Here are some simple tips to avoid scams:
- Don't click on any links or open any attachments in emails and SMS, even if the message seems to come from us.
- Think twice before sharing your personal information with anyone, especially over the phone or in writing.
- Never share your myGov sign in details with anyone, including your registered tax agent.
- Don't let your friends or family members use your TFN
- Don't share your online passwords with anyone and make sure you change them often.
For more information see:
Getting help
If you need help with your tax or super, phone us on:
- 13 28 61 – for personal questions
- 13 28 66 – for business questions
- 13 10 20 – for super questions.
If you prefer to speak to us in a language other than English, phone us using the Translating and Interpreting Service on 13 14 50.
We encourage you to contact us early so we can work with you – it's never too late to ask us for help.
What to expect when you phone us
You should have your TFN or ABN ready when you call.
When you speak to a customer service representative, they may ask you a series of questions to help identify you. This helps protect your personal tax records.
We can’t give you information about someone else, even if they’re family. If you're helping a friend or family member, they must be with you when you phone unless you are recorded as their 'authorised representative' in our systems.
Resources
There are more resources available to help you with your tax and super:
Key tax and super terms
The following table includes the definitions for common tax and super terms we use in Australia.
For more information see:
Term | Definition |
|---|---|
ATO online services | You can use ATO online services to:
To use ATO online services you will need a myGov account linked to the ATO. |
Australian Business Number, (ABN) | A number that a business uses to identify themselves when dealing with other businesses, clients or with government. |
Authorised representative | A person who can speak to us about your tax or super. You must officially let us know that you want them to speak to us for you. They can be a family member, a friend or a tax agent. |
Business activity statement (BAS) | A form some businesses use to report and pay their taxes such as goods and services tax (GST), pay as you go (PAYG) instalments and PAYG withholding tax. |
Centrelink | Centrelink is an Australian Government program that delivers a range of government (social security) payments and services. |
Company | A type of business structure. Companies must have a tax file number (TFN). They may need to have an Australian business number (ABN). The company is owned by any number of people. These people are called shareholders. If the company gets into debt shareholders do not have to use their own money to pay the debt. |
Deduction | Sometimes you have to buy things like tools or special clothing to help you do your job. The cost of some of these things can be used to reduce your taxable income. This is called a deduction. If you want to claim a deduction you must keep a record of what you bought. The record could be a receipt or a tax invoice. You can't claim a deduction if your employer:
|
Earn, Earned, Earnings | Money you get from:
|
Employee | A person who works for another person, business or organisation to earn money. They are told what work to do and how to do it. |
Employer | A person or business that employs people (workers). |
Expense | The amount of money you spend on a product or service. Some expenses can be claimed as deductions. |
Financial year | In Australia the financial year is from 1 July to 30 June. |
Fringe benefits tax, FBT | Some employers give their workers benefits related to their work. Examples could be a company car or private health care. These are called fringe benefits. If your employer gives you fringe benefits, they may have to pay more tax. |
Goods and services tax, GST | A tax of 10% which is part of the price of most products and services. The seller holds on to the tax and then pays it to us. |
Income | The money you earn from activities like:
|
Income statement | An income statement shows how much you earned and how much tax you paid in a financial year. It can also be called a Payment summary. You can see your income statement in ATO online services. |
Income tax | The amount of tax you have to pay based on your taxable income. This is also called tax payable. |
Independent contractor | An independent contractor does work for other businesses or people and may run their own business. They are not an employee. If you are an independent contractor, you decide how you do your work. You are generally paid for what you do, not for how long it takes you. You can pay someone else to do your work. This person would be called a sub-contractor. |
Investment | Using money or things you own to make more money. Examples are putting money in a bank account to earn interest, buying shares or buying a property to rent out. |
Invoice | A document that gives details of what was bought and sold. An invoice must be labelled as a tax invoice. It needs to include:
|
Lodge, Lodgment | Sending prepared documents, like your tax return or Business activity statement, to the ATO. |
Medicare | Medicare is an Australian Government program that gives Australians, and some people from overseas, a wide range of health and hospital services at no cost or low cost. Medicare is paid by a levy on a person's taxable income. |
myGov | A myGov account lets you link to a range of Australian Government services online in one place. |
Partnership | A type of business structure. A partnership is 2 or more people who run a business together. |
Pay as you go (PAYG) withholding | When an employer pays their employees or independent contractors they hold back (withhold) some money, which is the tax amount. The employer then sends the tax to us. |
Pay slip | A document your employer gives you each time they pay you. It shows how much you were paid and how much tax was sent to us. |
Receipt | A document which shows how much you paid for something and the date you bought it. It may also show how much GST was included in the price. |
Retire | To retire means you plan to never work full-time again. To use your super when you retire you must be older than a certain age (this is called a preservation age). |
Scam | A scam is a trick to get you to:
|
Sole trader | A type of business structure. A sole trader is a person who owns and operates a business for their own benefit. A sole trader may have employees. |
Super, Superannuation | Superannuation, or 'super', is your money for when you retire. If you are eligible for super, your employer must pay it into the super fund you choose. |
Super contribution | Money that you or your employer puts into your super fund. |
Super fund | An account into which you or your employer puts money while you are working. You can use the money when you retire or if you are living with a disability and can't work anymore. |
Super guarantee | This is the minimum amount of super your employer has to pay into your super fund. It is a minimum amount based on the current super guarantee rate of your ordinary time earnings. For example, Mary earns $1,000 a week (before tax is taken out). The super guarantee amount is worked out as $1,000 × the super rate. This amount is paid by Mary's employer on top of Mary's earnings. |
Tax | Tax is money people and businesses pay to the Australian Government. It is used to provide services we all need, such as:
You may need to pay tax if you get income from:
|
Tax agent | A person or business that you pay to manage your tax. Only a registered agent can ask to be paid for their services. If they are registered it means that they know what they need to do to be a tax agent. You can find a registered tax agent on the Tax Practitioner's Board websiteExternal Link. |
Tax concession | Tax concessions are benefits for some groups of people or businesses. The benefits can include:
|
Tax debt | When you owe us money. For example, if you did not pay enough tax during the year you will owe us money. |
Tax file number, TFN | Your tax file number (TFN) is your personal identification number in our tax system. This is the number we and your employer use to keep track of how much tax you have paid. You keep the same TFN for life, even if you change your name or address, change jobs, or move interstate or overseas. Keep your TFN safe. Do not let anyone else use your TFN – not even friends or relatives. |
Tax file number (TFN) declaration | When you start a new job your employer will ask you to fill out a form called a Tax file number declaration. Your employer uses the information to work out how much tax to take out of your pay. This is called pay as you go (PAYG) withholding. Your employer pays this tax to us. If you do not fill out the TFN declaration form your employer will take more tax out of your pay than you may need to pay. You should get this extra tax back as a tax refund when you lodge your tax return. |
Tax Help | A free service we run to help people with low income to prepare and lodge their tax return. |
Tax offset | Some people and businesses are eligible for tax offsets. A tax offset reduces how much tax you pay. A tax offset can also be called a tax rebate. |
Tax rate | The amount of tax you pay out of each dollar you earn. Your tax rate depends on your circumstances. |
Tax refund | If you paid more tax than you needed to in a financial year, we will give the money back to you. |
Tax return | A form you fill in each year and give to us. In the form you tell us how much money you earned and how much tax you have already paid. You also tell us about deductions you want to claim. You need to have records (receipts or invoices) to prove what you tell us. Most people need to lodge us a tax return each year. We will work out if you have paid the right amount of tax. If you have paid too much, we will give money back to you (a tax refund). If you have not paid enough tax you will have to pay more (a tax bill). |
Tax withheld | This is the amount of money that employers take out of your pay and give to us. |
Tax-free threshold | If you are an Australian tax resident, the first $18,200 you earn is not taxed. This is called the tax-free threshold. Foreign residents cannot claim the tax-free threshold. When you start a new job and fill out the TFN declaration form you tick a box to claim the tax-free threshold if you are an Australian resident. If you work in more than one job you should claim the tax-free threshold from the employer you earn the most money from. If you think you will earn less than $18,200 from all of your jobs you can claim the tax-free threshold from all your employers. |
Taxable income | The total income you earned in a financial year after you have taken away the deductions you can claim. |
Trust | A type of business structure. A trust is a person or company that looks after assets (like money or investments) so that other people can receive income from the assets. The people who receive the income are called beneficiaries. |
Authorised by the Australian Government, Canberra.