By Angela Martin
Wait what?? We must pay tax on the money earned from our job? Why? How do we get a tax file number? What do we do if we have lost it?
These responses and blank looks are what greet the Money Mentor facilitators when they explain the concept of taxation to secondary school students.
When entering the workforce many of us have had no one explain tax so we don’t understand why we are required to do certain things as economic citizens.
But it’s important that students understand that income tax funds services and infrastructure we all use, for example health care, education, emergency services, road, and trains.
Taxes on individuals and businesses are calculated by the taxable income they earn. The more you earn, the more you pay. Well that’s the theory.
The Money Mentor program starts with explaining the fundamentals of income tax, how to obtain a TFN and the purpose of having one. Students are then directed to investigate the ATO website to find out the current taxation rates.
Near the end of the program students are asked to explore professions of interest to them to find out how much the average wage is for their chosen profession and hence how much tax they’ll be required to pay. This is shocking to many!
The program also introduces students to budgeting, with simple activities requiring them to document basic income and expenses. This helps to assess if they’re living within their means or beyond it.
Taxation deductions are also discussed explaining why certain professions can claim certain deductions, and what deductions you could be eligible for if you are working from home.
As parents and carers, it is important to have money management discussions at home with your children as they establish themselves as income earning adults. Particularly when they set themselves up with the ATO for the first time.
If you struggle to find the time to explain finances with your teenager, perhaps ask your school what they are doing to support students understand these essential life skills. They may already have a program in place but if not, the team at the Money Mentor program is happy to chat to your school to support students to gain this knowledge.
If you would like to apply for a tax file number, head to the myGov website and search for ‘getting a tax file number’. The ATO site also has information about deductions you could be eligible for.
And don’t forget, now is a great time to make a tax-deductible contribution to a registered organisation, the details of which can also be found at the ATO website.