If you get Centrelink money, and also have a paid job, make sure your boss is taking enough tax out of your pay.
If you only get money from Centrelink, then they don’t usually take tax out of your Centrelink payment.
But if you work, AND you get Centrelink money this can change. At tax time, all your Centrelink money and your work money are added together. Then, the government works out how much tax you have to pay.
If you are not getting enough tax taken out of your work money, you might have to pay back money to the tax office. This is called a tax debt. The tax office knows how much you get: every time you get paid from work, and from Centrelink, they have to give this information to the tax office too.
Make sure you tell your boss if you are also getting a Centrelink payment. Ask them to check how much tax have to pay in one year, when your Centrelink payment and your work money are added together.
There is another way to make sure you don’t get a tax debt when you work and get Centrelink money. When you start a job, you have to fill out a form called a Tax File Declaration.
At question number 9, it asks “Do you want to claim the tax free threshold from this payer?” Tick “No”. Your boss will take extra tax out of your pay.
If you pay too much tax, you should get that money back at tax time as a tax refund, when you do your tax return. This can be a good way to save some money.
But be careful – if you owe Centrelink or Child Support any money, they can take your tax refund and use it to clear your debt.
Tax can be tricky. Come and talk to MoneyMob if you want to know more.