What is tax, why we pay it and why we do a tax return
What is tax?
Tax is money that individuals and businesses pay to the government. It is usually collected as a percentage of income (income tax) for individuals. It is collected by the Australian Taxation Office (ATO).
Why do we pay tax?
We pay tax so the government can fund public services that individuals could not easily fund on their own for the benefit of community. This may include:
- Hospitals and healthcare.
- Schools and education.
- Roads and public transport.
- Emergency services (police, fire, ambulance).
What is a Tax File Number?
A Tax File Number (TFN) is your personal tax number from the government.
It is just for you – no one else has the same number. Your TFN is private, so you should keep it safe like your passwords and ID and don’t share it with anyone. You give your TFN to:
- Your employer when you start a job by completing a tax declaration.
- Your accountant or licenced tax agent
- Your superannuation fund.
- Your bank when opening an account to avoid extra tax.
If you don’t give your employer your TFN, they may take more tax out of your pay, and you will have to claim it back at tax time.
If you do not have a TFN, you can apply at the ATO website.
It is best to apply for a TFN as soon as you start earning money. There is no age limit.
What if I have more than one job at the same time?
- On your tax declaration you can only claim the tax-free threshold on one job.
- The tax-free threshold is the amount you can earn before you pay tax, e.g in 2025 it was $18,200.
Usually this is claimed on the job that pays the most. - You should only claim the tax-free threshold on one job or you may end up owing the ATO.
What is a Tax Return?
A tax return is something you complete each year to tell the government:
- How much money you earned.
- How much tax was taken out of your pay.
The tax year runs from 1 July this year to 30 June the next year – you must lodge your tax return each year.
After you lodge your tax return:
- If you paid too much tax, you get money back (a refund).
- If you didn’t pay enough tax, you may need to pay some money.
You lodge your tax online through MyGov. Many people get help from:
- The ATO website (through myGov).
- A registered tax agent.
- Free help through the ATO Tax Help Program or National Tax Clinics (if eligible).
Help
Call Mob Strong on 1800 808 488 for more information. We are a free First Nations driven legal advice and financial counselling service. We help Aboriginal and Torres Strait Islander peoples from anywhere in Australia. We are a free and independent service. We keep your information private.
Last updated May 2025
