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YOUR TAKE HOME PAY

So you just got a new job – go you! Right now you’re probably thinking of all the things you can buy with your new found wealth. But before you go mentally spending all that cash, you should know that what you make and what you get to keep are two different things. Before you actually get the cash some of your pay may be taken out for other things. These are called deductions; and the major one is tax.


In Australia, you get to earn a certain amount of money each year without paying tax. (Wooooo!). This is called the Tax Free Threshold and at the moment it’s set at $18,200.


Anyone who earns more than the Tax Free Threshold will have to pay tax. Tax is paid to the government and is generally used by them to pay for things like roads, schools, police departments and all the other things the government pays for. Tax is usually taken out of your pay each time you get paid, and no, you can’t get out of paying tax (people go to jail for that) - it’s just the rules.


You might also have other deductions to pay for things like a uniform if you have one or a work social club membership. Make sure you understand what deductions you will be paying and if you’re not sure about something check it out with your boss or pay officer.


The total amount of money you earn is called your Gross Income (not because it’s particularly disgusting – gross in this instance just means ‘without deductions’). After your deductions have been taken out, what’s left over is your take-home pay, this is called your Net Income – and THAT’S the bit you get to keep.

 


 

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Any advice in this informaAny advice in this information is general and has been prepared without taking account of your particular objectives, financial situation or needs. Before you act on any advice you should consider whether it is appropriate for you. IMB Ltd trading as IMB Bank ABN 92 087 651 974 AFSL/Australian Credit Licence 237 391