Speaker 1: Hello, my name's Santasha Nabananga Bamblet. I'm a proud yr
Speaker 1: the Order Kerni Whoalbury and a waddery woman. And before
Speaker 1: we get started on She's on the Money podcast, I
Speaker 1: would like to acknowledge the traditional custodians of the land
Speaker 1: of which this podcast is recorded on a wondery country,
Speaker 1: acknowledging the elders, the ancestors and the next generation coming
Speaker 1: through as this podcast is about connecting, empowering, knowledge sharing
Speaker 1: and the storytelling of you to make a difference for
Speaker 1: today and lasting impact for tomorrow.
Speaker 2: Let's get into it.
Speaker 3: She's on the Money, She's on the Money.
Speaker 4: Hello, and welcome to She's on the Money the podcast
Speaker 4: Millennials who want financial freedom.
Speaker 2: You sound so cheap, But this morning I'm in such
Speaker 2: a good mood. Why are you in such a good mood.
Speaker 4: You've never gotten up this early ever in my lifetime? Absolutely,
Speaker 4: what time is it? It's nine twelve, so.
Speaker 2: Nine twelve am. And Beck has never been up there.
Speaker 2: I've never seen the morning sun. It is so gorgeous.
Speaker 3: Where I'm living at the moment is a fair bit
Speaker 3: out of the CBD. And obviously I'm a little bit
Speaker 3: used to having only like a fifteen minute commute. This morning,
Speaker 3: beck one hour and fifty two minutes to get to
Speaker 3: the hell yeah, I had to get up before six am,
Speaker 3: and you're you're talking about nine twelve am being ridiculous.
Speaker 2: Oh my god, why did it take so long?
Speaker 3: Traffic? Traffic, very sexy traffic. Did you know what else
Speaker 3: is sexy?
Speaker 2: Bet? You get this tax?
Speaker 4: My god, that is kind of sexy, and you know,
Speaker 4: white sexy. Because I have no idea how it works. Yeah,
Speaker 4: I feel story.
Speaker 3: Yeah it's not, it's not actually a mystery, but I
Speaker 3: feel like so many of us are just living under
Speaker 3: a rock when it comes to taxes. Any if you've
Speaker 3: heard any of my content historically, I genuinely believe it
Speaker 3: is a privilege to pay tax. And we'll go on
Speaker 3: and on about that a little bit later because I
Speaker 3: can't stop myself. But I just think we are so
Speaker 3: lucky to live in a world where everything is looked after, Like,
Speaker 3: you know, if someone gets sick, we have a healthcare
Speaker 3: system that can prop us up. We have you know,
Speaker 3: roads that are drivable, We have infrastructure that is keeping
Speaker 3: us safe and has been built safely. There are just
Speaker 3: so many things in Australia that we should be grateful for.
Speaker 3: And the amount of times I hear people saying, oh
Speaker 3: my gosh, I have to pay so much tax the
Speaker 3: amount of times I snap back and I'm like, okay, cool,
Speaker 3: So you also make a lot of money. They might
Speaker 3: be nice, That might be nice for you, but I'm
Speaker 3: sick of people talking about how much of drag it is.
Speaker 3: And while we'll get into it, and I know nobody
Speaker 3: loves paying taxes, we'll talk about how they work.
Speaker 2: But have you ever heard the.
Speaker 3: Saying beck that there are only two certain things in love?
Speaker 2: Yes, live, love and love. No, those are three. Those
Speaker 2: are three.
Speaker 3: We're talking about the phrase references too, and those two
Speaker 3: are death and taxis Ah, yeah, that's really sexy, sut
Speaker 3: And obviously this show is all about money, so we're
Speaker 3: going to be talking about the latter on today's show.
Speaker 2: Don't worry.
Speaker 3: But often when something is so universal, we don't actually
Speaker 3: stop to ask really basic questions about it right. It
Speaker 3: often becomes a given. And I think that's why our
Speaker 3: education system has genuinely skipped over financial literacy for so long,
Speaker 3: because we should just get it right right, and that's
Speaker 3: not the case at all, but taxes beck just an
Speaker 3: inevitable thing that we actually have to organize each and
Speaker 3: every single year.
Speaker 2: But don't worry.
Speaker 3: If you've maybe let it slip, it is not the
Speaker 3: end of the world. We can get you back on track.
Speaker 3: But very few questions are ever asked. So I thought,
Speaker 3: why not do an entire episode on the sexy, sexy
Speaker 3: topic of paying taxes.
Speaker 2: Let's jump straight in.
Speaker 3: Oh, you look so psyched. You came in here absolutely cheaper.
Speaker 3: And then I was like, we're going to talk about
Speaker 3: tax and You're like, why did I get up this early?
Speaker 4: All I know about tax so far is that I
Speaker 4: don't understand how people let it slip?
Speaker 2: How do they do it late? Because I get so
Speaker 2: excited July.
Speaker 3: First, you get excited in my tax Yeah, because I
Speaker 3: don't wonder I let you on this team.
Speaker 4: I just think that, okay, cool, I'm going to get
Speaker 4: some money and I'm going to do it as soon
Speaker 4: as it hits July one, twelve am. I am so
Speaker 4: excited and I don't know why. I don't know where
Speaker 4: it's coming from, but I'm going to get some money.
Speaker 3: Ten out of ten. That sounds like an experience I
Speaker 3: would like to sign up for. That is your experience,
Speaker 3: and I don't want to stereotype here. That's your experience
Speaker 3: because you are a PAYG employee and often over the
Speaker 3: year you would have recruit a few things that you
Speaker 3: could have claimed on tax, and you would have submitted
Speaker 3: in your tax return to say, oh, I can claim
Speaker 3: ab C and D. But in your PAYG job, you
Speaker 3: were taxed at the full rate of your marginal tax rate,
Speaker 3: not including any of the things you could claim back.
Speaker 3: So then tax time, when it came to submitting your tax,
Speaker 3: you're going to get a little bit back, which is
Speaker 3: really sexy and why so many people love doing their taxes,
Speaker 3: just like you, but also why somebody like me, who's
Speaker 3: a business owner doesn't love doing it because I have.
Speaker 2: The opposite problem.
Speaker 3: The second I submit my tax, often I end up
Speaker 3: with a little bit more to pay than I had
Speaker 3: actually anticipated because business financials are not as clean cut
Speaker 3: as a PAYG employee. So you're side of the table
Speaker 3: excited about tax. My side of the table not that excited,
Speaker 3: but also still thinks it's a privilege.
Speaker 4: Okay, Well, on that, I guess we'll start a base
Speaker 4: level what is income tax?
Speaker 2: Sexy question? I like it.
Speaker 3: So, income tax is the amount of tax that is
Speaker 3: applied to your quote taxable income every year and is
Speaker 3: paid on every single form of income that you derive
Speaker 3: as an individual. The amount that you pay is going
Speaker 3: to really depend on how much that you earn and
Speaker 3: any deductions that you can claim.
Speaker 2: Or offset that you're entitled to.
Speaker 3: So if you're an employee, your employee is going to
Speaker 3: deduct the tax from each pay so you don't need
Speaker 3: to stress about it. They're going to do it for you,
Speaker 3: and they're going to send that tax from your pay
Speaker 3: straight to the ATO or the Australian Taxation Office on
Speaker 3: your behalf. And that's the pot of money that goes
Speaker 3: to the taxation office that you're claiming on to say, actually, Hi,
Speaker 3: I had some deductions, can you give me some of
Speaker 3: that money back at tax time?
Speaker 2: And that's why you think it's so sexy.
Speaker 3: If you're someone who is self employed, or you freelance
Speaker 3: or you have your own business, this is going to
Speaker 3: be your responsibility. So you're going to need to set
Speaker 3: aside money each and every single pay, or each and
Speaker 3: every single time you derive an income to pay that tax.
Speaker 3: And if you want some more information, and I'm just
Speaker 3: going to do a not so subtle plug to the
Speaker 3: Business Bible, our business podcast if you haven't listened to that.
Speaker 3: On that podcast, I actually break down exactly how I
Speaker 3: run my business bank accounts, and I think that as
Speaker 3: a small business owner, that's really important to go have
Speaker 3: a look at because there is so much confusion over
Speaker 3: what is right and what is wrong. And I'm not
Speaker 3: saying I am absolutely right, but it works for me.
Speaker 3: And tax is not stressful. So at the end of
Speaker 3: every single financial year, most people need to lodge a
Speaker 3: tax return with the ATO, and you're actually able to
Speaker 3: do that yourself, or you're able to enlist the help
Speaker 3: of an accountant or a tax agent. And I think
Speaker 3: that's an important question to cover as well, because so
Speaker 3: many people ask do I actually need an accountant to
Speaker 3: do this? And I guess the summary of that is
Speaker 3: the tax system, from my perspective, is actually quite elite,
Speaker 3: and they actually want you to file your tax return right.
Speaker 3: They want you to do that as soon as possible,
Speaker 3: and their online claiming system is actually super easy. So
Speaker 3: unless you have a more complicated tax return, if you're
Speaker 3: just a salaried PAYG employee who has a very clean
Speaker 3: cut salary. I don't see why doing it yourself would
Speaker 3: be too much of an issue.
Speaker 4: Right right, Okay, yeah, I do mind myself and I
Speaker 4: feel like it's not too complicated.
Speaker 2: It can't be.
Speaker 3: If you're like me, I don't understand tax but I
Speaker 3: do my own returns, I'm like, okay, well their system
Speaker 3: must not be that flawed.
Speaker 4: Yeah, exactly, it's very very easy to follow the prompts
Speaker 4: and kind of like add maybe deductions that you really didn't.
Speaker 3: All right, right backtrack, we would absolutely not do that.
Speaker 3: You're doing that, and you're going to out yourself on
Speaker 3: Australia's biggest finance as they might least, just do everything
Speaker 3: very by the book.
Speaker 2: Wow, fancy VI.
Speaker 4: When you mentioned before that all the income you earn
Speaker 4: is taxable, what exactly does that mean? What income is taxable?
Speaker 2: Yeah?
Speaker 3: Okay, so you actually have to pay tax on any
Speaker 3: money earned from a lot of different things, so from
Speaker 3: your job, so from any type of employment. If you
Speaker 3: have a pension or an annuity, which is something that
Speaker 3: a lot of people listening to Chees on the Money
Speaker 3: probably have no experience in.
Speaker 2: But I'll teach you about that later.
Speaker 3: Don't worry most government payments from any type of investment
Speaker 3: you have, from any type of capital gains you have.
Speaker 3: So if you bought and then sold a property and
Speaker 3: you made capital gain on that property, which means that
Speaker 3: property increased in value over time, you're going to pay
Speaker 3: tax on that. You're going to pay tax on some
Speaker 3: grants and payments that you might receive. You would pay
Speaker 3: tax on any income that you get from trusts or
Speaker 3: partnerships or businesses. And you'd also pay tax on foreign income.
Speaker 3: And I think that that is one of those ones
Speaker 3: which is a little bit misconstrued because people go, but
Speaker 3: if I made money in the UK, I shouldn't have
Speaker 3: to pay tax here because I paid it in the UK,
Speaker 3: and we actually have to declare it and some of
Speaker 3: that income could be taxable.
Speaker 4: Oh okay, and what income isn't taxable?
Speaker 2: Okay?
Speaker 3: So get this. The worst of all is lottery wednings.
Speaker 3: So if you win the lotto or other prizes, you
Speaker 3: don't have to pay tax on it. But hypothetically, if
Speaker 3: you are really smart, what you would do with your
Speaker 3: lottery winnings is invest it. If that investment starts making money,
Speaker 3: you have to start paying tax on that money. That
Speaker 3: that money has made. Does that make sense?
Speaker 2: That makes sense. Yeah, So the lump sum.
Speaker 3: Absolutely tax free, but anything above and beyond that that
Speaker 3: that money makes for you is going to be taxable
Speaker 3: because that's just become an income.
Speaker 2: Oh okay, so may as well splow.
Speaker 3: Just just go ahead, buy a new car, get a boat.
Speaker 2: Do you want to jet skalle? Let's get three? Why not?
Speaker 1: So?
Speaker 3: You don't have to pay any tax on lottery winnings
Speaker 3: or other prizes. How good, things like small gifts and
Speaker 3: birthday presents. You don't have to pay tax on the
Speaker 3: fifty bucks that your grandma gave you for Christmas. Imagine
Speaker 3: if you did, Oh my gosh, it would literally be
Speaker 3: the worst. You don't have to pay tax on some
Speaker 3: specific government grants and payments. You don't have to pay
Speaker 3: tax thankfully on child support.
Speaker 1: Good.
Speaker 2: You don't have to pay.
Speaker 3: Tax on the tax free portion of a redundancy payout.
Speaker 3: So if you haven't gone through the redundancy process before,
Speaker 3: it actually could be quite confusing, and it's something that
Speaker 3: I do think we all should understand because it could happen.
Speaker 3: But essentially, if you get made redundant in your role,
Speaker 3: you will accrue a lump some payment to be paid
Speaker 3: out of, and it will depend on how long you've.
Speaker 2: Worked for that business.
Speaker 3: So if you've worked there for twelve months, it won't
Speaker 3: be that chic, but if you've worked there for like
Speaker 3: ten plus years, it could look really sexy. And then
Speaker 3: the government looks at that lump some payment and says, okay,
Speaker 3: we're only going to tax a certain portion of that
Speaker 3: and the.
Speaker 2: Rest of that is tax free, which is just good
Speaker 2: to know.
Speaker 3: Yeah, it's not essential information for absolutely everybody, but I
Speaker 3: think that if you're going through that process, just a
Speaker 3: little fyi to keep it in check. And if you
Speaker 3: are going through that process and it is a nice
Speaker 3: amount of money, please have a chat with your accountant
Speaker 3: to make sure that you're in the best possible position.
Speaker 3: Because I don't mean to be rude, but not every
Speaker 3: single employer is going to get the calculations correct because
Speaker 3: it's not all that often that people, you know, do
Speaker 3: redundancy payouts for employees, right, right, And then you don't
Speaker 3: need to pay tax on government super co contributions, which
Speaker 3: is very nice.
Speaker 4: Super co contributions that's when you pay a certain amount,
Speaker 4: like a small amount, and the government matches it matches.
Speaker 3: Matches it or adds something else for you, if.
Speaker 2: You are on a low income, or for anyone, for anyone,
Speaker 2: it's a co contribution.
Speaker 3: And so essentially, if you're getting a co contribution, you
Speaker 3: probably meet the criteria of being able to get that
Speaker 3: co contribution. If you're making millions, you probably not get
Speaker 3: the co contribution.
Speaker 2: I see, I see.
Speaker 4: So my next question is why do taxes even exist?
Speaker 4: And where are our taxes going?
Speaker 3: So let's just do a little preparation for our next
Speaker 3: trivia and I beck I'm pretty sure we're on the
Speaker 3: same page. We've never done this before, but like, I reckon,
Speaker 3: you and I would be a really good trivia team,
Speaker 3: do you think so? I reckon, I reckon because we
Speaker 3: have such an eclectic knowledge between us, Like there's no
Speaker 3: way I know everything that you know, and like I'm
Speaker 3: just technically intelligent, Like I'm just not street smart, you know,
Speaker 3: Like you're like the street smart one in our relationship
Speaker 3: and I'm like in books smart one, and so like
Speaker 3: together we could take over the trivia.
Speaker 1: Well.
Speaker 4: I got to tell you, though, there is no question
Speaker 4: in the history of trivia that asks about street smarts.
Speaker 2: And I am usually quite terrible.
Speaker 3: Yeah, well, but when it comes to book smarts, here's
Speaker 3: some hot tips for you. So the federal income tax
Speaker 3: was first introduced in nineteen fifteen in order to help
Speaker 3: fund Australia's war effort in the First World War. So
Speaker 3: it hasn't been around forever and ever and ever. But
Speaker 3: essentially the ATO or the Australian government collects taxes and
Speaker 3: they actually fund community services.
Speaker 2: I feel like taxes.
Speaker 3: Get a really bad rap some times because people are like, ah,
Speaker 3: we're just funding dull bloodgers. Yep, cool, really glad that
Speaker 3: we can support people in our community.
Speaker 2: That need it.
Speaker 3: There is always, always always going to be a very
Speaker 3: small group of people who wrought a system. There is
Speaker 3: always going to be a very small group of people
Speaker 3: who take advantage of any system that exists. And for
Speaker 3: you to crucify absolutely everybody else who is making use
Speaker 3: of a system that is from my perspective, absolutely essential,
Speaker 3: that is wildly unfair.
Speaker 2: Absolutely we wilieve it at that.
Speaker 3: But as you know, like it doesn't matter what it is,
Speaker 3: like people wrought in the system, it coals when they
Speaker 3: do their self checkout. Like absolutely every system has people
Speaker 3: who are like na ah, I'm going to do it differently,
Speaker 3: and I'm going to take advantage. But just because people
Speaker 3: do that does not mean we should throw the entire
Speaker 3: system out right. Yeah, But essentially, the ATO collecs taxes
Speaker 3: to pay for things like our healthcare, our education system,
Speaker 3: our emergency services, roads and then train lines and trammed
Speaker 3: and stuff like that. It pays for the Australian Defense Force.
Speaker 3: It also pays for welfare and disaster relief. So there
Speaker 3: are so many things that our taxes pay for which
Speaker 3: ultimately put us in a very privileged and better off position.
Speaker 2: I'm very very grateful for that, so am I.
Speaker 3: I just I hate this concept that people are like, oh,
Speaker 3: I'm paying tax for what for them to live their
Speaker 3: best life? It's like, do you know what if you
Speaker 3: genuinely believe that someone is living their best life on
Speaker 3: less than minimum wage, you've got something else coming. Yeah,
Speaker 3: you have rocks in your head because that is not
Speaker 3: easy or from my perspective, a best life.
Speaker 2: Like, Yeah, that.
Speaker 3: Income is about two hundred and fifty dollars a week,
Speaker 3: and most people who are utilizing that system are definitely
Speaker 3: needing more than two hundred and fifty dollars a week
Speaker 3: to live. They might have kids, they might have other commitments,
Speaker 3: doesn't leave anything for saving or investing or creating a
Speaker 3: dream life. Like in a way, it blows my mind
Speaker 3: that people would go taxes because such a small percentage
Speaker 3: of it goes towards welfare. Like, no, I love that
Speaker 3: system and I want to support it to the nth degree.
Speaker 2: I love it as well.
Speaker 4: And if they maybe touch would ever had to be
Speaker 4: in a situation where they needed that assistance, then I'm
Speaker 4: sure they'd be very, very grateful that they had paid
Speaker 4: tax I.
Speaker 3: Couldn't agree more. And then also to further that, it's
Speaker 3: funny because Sony and I could go on and on
Speaker 3: about this, but we're going to do an entire episode
Speaker 3: on the cost of care soon about how much a
Speaker 3: cost to live with disability and the insurances you need
Speaker 3: to cover that. But I also think it's kind of
Speaker 3: hypocritical because here in Australia we are the most underinsured
Speaker 3: country in the entire world. And the main argument people
Speaker 3: have when they're like, oh, I don't need insurance back,
Speaker 3: it doesn't matter, like I don't need to waste my
Speaker 3: money on income protection. It's what the government's therefore, that's
Speaker 3: what I paid taxes for But then on the flip side,
Speaker 3: they're crucifying people who are actually making use of those systems,
Speaker 3: And it just is this crazy juxtaposition where they're like,
Speaker 3: I don't want to pay taxes because people are abusing
Speaker 3: the system and I'm working so that they can live
Speaker 3: their free life. And then on the flip side they're like,
Speaker 3: by the way, I also don't want to get insurances
Speaker 3: because if anything would happen to me, I could just
Speaker 3: go on the doll Yeah exactly, you little hypocrites.
Speaker 2: You kick a lane.
Speaker 4: Maybe exactly on the topic of picking a lane, Yeah,
Speaker 4: what lane.
Speaker 2: Do we fit in? What is a tax bracket? What
Speaker 2: are the rates?
Speaker 1: Yeah?
Speaker 3: All right, So a tax bracket is basically the range
Speaker 3: of income that you fall into, which then determines how
Speaker 3: much tax you're going to have to pay. It's kind
Speaker 3: of like buckets. And from my perspective, Australia has a
Speaker 3: very progressive tax system, which actually means the higher your income,
Speaker 3: the more tax you are going to pay. So beck,
Speaker 3: you can earn up to eighteen two hundred dollars in
Speaker 3: a financial year and not pay one cent of tax.
Speaker 2: Very sexy. That is very sex very sexy.
Speaker 3: This is known as the tax free threshold, and after
Speaker 3: which the tax rate then kicks in. So you would
Speaker 3: have come up against a conversation or even just a
Speaker 3: one sided conversation with you and some tax papers when
Speaker 3: you join a new job whether you want to claim
Speaker 3: the tax free threshold or not. And a lot of
Speaker 3: people are like, I want.
Speaker 2: A tax free threshold.
Speaker 3: Of course they do, So you might be really tempted
Speaker 3: if you get a second job in the same financial year,
Speaker 3: to go and tick that again and be like, yeah,
Speaker 3: I'll claim it again. And basically, when you're ticking the
Speaker 3: box that says claim the tax free threshold, you're notifying
Speaker 3: your employer that you have not made eighteen thousand, two
Speaker 3: hundred dollars this year, and they're then going to pay
Speaker 3: you eighteen thousand, two hundred dollars in full before starting
Speaker 3: to apply your tax rate. Because you know how before
Speaker 3: I said, your boss goes and takes your income, sends
Speaker 3: a portion of the income off to the taxman, and
Speaker 3: then gives you the money that you can spend the
Speaker 3: responsibilities on them. That's telling them that the responsibility on
Speaker 3: them is to make sure that you get your eighteen thousand,
Speaker 3: two hundred dollars tax free, no worries and carry on.
Speaker 3: But if you've already claimed that before at a previous
Speaker 3: job and then you're claiming it at your second job,
Speaker 3: your second job has no idea what your previous job
Speaker 3: pays you.
Speaker 2: It's all about disclosure.
Speaker 3: So what's gonna happen is they're gonna pay you, and
Speaker 3: you're gonna get your tax free threshold twice, and then
Speaker 3: come tax time, you're gonna have to pay it back
Speaker 3: and you're gonna get bit in the bottom when it
Speaker 3: comes to paying tax, and you're not going to understand why,
Speaker 3: because you'll be like, well, I didn't understand what tax
Speaker 3: free threshold men in the first place. I thought it
Speaker 3: would have all been automatically calculated. And that's not actually
Speaker 3: the case, because your employer has no idea what other
Speaker 3: tax you've paid, because you haven't submitted a tax return yet,
Speaker 3: has it all been added up. No one's calculated it
Speaker 3: for you. They'll let you make use of that system
Speaker 3: twice because they don't know any different. So what we
Speaker 3: actually need to understand is one what the tax free
Speaker 3: threshold is, and two, if you've already earned more than
Speaker 3: eighteen two hundred dollars. Don't tick that box because you're
Speaker 3: going to end up having to pay that tax back
Speaker 3: when tax time comes, and that can be quite painful.
Speaker 2: So when at side notes.
Speaker 4: So just hypothetically, yeah, I make twenty thousand dollars a year, Yes,
Speaker 4: tick the tax three threshold box.
Speaker 2: I only pay tax.
Speaker 4: On one thousand, eight hundred dollars.
Speaker 3: Do Yeah, So what would happen is up until eighteen thousand,
Speaker 3: two hundred dollars you'd pay absolutely no tax, not one cent.
Speaker 3: And then for every dollar you earn over eighteen thousand dollars,
Speaker 3: you would pay nineteen percent tax. Okay, because you've only
Speaker 3: earned twenty thousand dollars, So that takes you into the
Speaker 3: first I guess bucket of tax. And so that's a
Speaker 3: good segue. I suppose let's go through what those marginal
Speaker 3: tax rates look like. I feel like the word marginal's
Speaker 3: just so unnecessary, but that's okay. So essentially, the tax
Speaker 3: rates for the twenty twenty one and twenty twenty two year,
Speaker 3: which you would have just submitted last year, and the
Speaker 3: twenty twenty two slash twenty twenty three financial year are
Speaker 3: actually the same. That is important because sometimes the tax
Speaker 3: rates change, So that is what we're talking about today. So,
Speaker 3: as we said before, no tax if you're earning eighteen thousand,
Speaker 3: two hundred dollars or under. But the second you get
Speaker 3: to eight eighteen thousand, two hundred and one dollars all
Speaker 3: the way up to forty five thousand dollars, you're going
Speaker 3: to pay nineteen percent of any dollar over that eighteen thousand,
Speaker 3: two hundred dollars. That's the second bucket. So third bucket
Speaker 3: is forty five thousand and one dollar all the way
Speaker 3: up to one hundred and twenty thousand dollars. Now, this
Speaker 3: is a relatively new tax bracket. It used to be smaller,
Speaker 3: so the forty five thousand dollar bracket went up to
Speaker 3: about eighty thousand dollars, and I'm really glad that this
Speaker 3: is expanded a little bit. So you're now on a
Speaker 3: lower tax bracket if you earn up to one hundred
Speaker 3: and twenty thousand dollars, which I think is really sexy.
Speaker 3: But essentially what happens when you earn over forty five
Speaker 3: thousand dollars is you now have a two component tax rate.
Speaker 3: You pay what's called a base amount, and then you
Speaker 3: pay a percentage amount, and it's not confusing. I promise,
Speaker 3: it's just a set amount. If you earn more than
Speaker 3: forty five thousand dollars, you'll pay five thousand and ninety
Speaker 3: two dollars in tax, and on top of that, you
Speaker 3: will then pay thirty two and a half percent of
Speaker 3: the excess over forty five thousand dollars.
Speaker 2: Does that make sense?
Speaker 3: So you've kind of got a base amount that you
Speaker 3: owe the government as a you know, it doesn't matter.
Speaker 2: What it is.
Speaker 3: You might earn forty six thousand dollars, Yeah, but you
Speaker 3: will always owe that five thousand and ninety two to
Speaker 3: begin with, and then you pay a percentage of every
Speaker 3: dollar over that. Okay, so if I'm making one hundred
Speaker 3: and ten thousand dollars, I'll still pay the base five thousand,
Speaker 3: yeah ninety two. Yeah, it doesn't change whether you're earning
Speaker 3: that one hundred and ten or you're earning fifty grand.
Speaker 3: It's exactly the same tax rate, which is why it
Speaker 3: kind of, I want to say sucks in a way,
Speaker 3: but it's actually a very fair and equitable tax system
Speaker 3: from my perspective, comparing it to every other tax system
Speaker 3: around the world. The next bracket will be nice to
Speaker 3: be in this tax bracket is the fourth bucket.
Speaker 2: And this fourth bucket is.
Speaker 3: From one hundred and twenty thousand and one dollar up
Speaker 3: to one hundred and eighty thousand dollars, in which case
Speaker 3: your base amount of tax payable that jumps significantly. So
Speaker 3: the base amount of tax payable is twenty nine thousand,
Speaker 3: four hundred and sixty seven.
Speaker 2: Dollars, oh my gosh, plus.
Speaker 3: Thirty seven percent of excess over one hundred and twenty
Speaker 3: thousand dollars. And then the fifth bucket, which is the
Speaker 3: highest marginal tax rate here in Australia, is anyone who
Speaker 3: earns more than one hundred and eighty thousand dollars pays
Speaker 3: a minimum amount of fifty one thousand, six hundred and
Speaker 3: sixty seven dollars in tax plus forty five percent of
Speaker 3: excess over one hundred and eighty thousand dollars.
Speaker 2: Oh that's a lot of money.
Speaker 3: It is a lot of money. And I guess, contextualizing
Speaker 3: this a little bit, none of us were born before
Speaker 3: nineteen fifteen, Like, it's just it's not possible, right, So Beck,
Speaker 3: when you were born, this tax system existed. In fact,
Speaker 3: this tax system was not as sexy as it is now.
Speaker 3: It's a better, more equitable tax system today than it
Speaker 3: was when you were born, right and you grew up
Speaker 3: and you were told you're going to get a job,
Speaker 3: and you're going to grow and learn and develop, and
Speaker 3: once you get your full time job, you're going to
Speaker 3: pay tax. Like it has always been a given. This
Speaker 3: is not something that has been put on you as
Speaker 3: a surprise, like you didn't get your first job and
Speaker 3: someone went, oh, by the way, have you heard of tax?
Speaker 3: And you're like no, what, Like this is something that
Speaker 3: has existed the entire time. And I think it's really
Speaker 3: important to remember when we're looking at salary packages or
Speaker 3: what we're going to have in take home salary, is
Speaker 3: that we always talk if we are an employee about
Speaker 3: post tax earnings because at the end of the day,
Speaker 3: you have always been in a position where if you
Speaker 3: wanted to work in Australia, you would pay tax, full stop,
Speaker 3: end of story. You have always known that it doesn't
Speaker 3: matter if you didn't understand the tax system or how
Speaker 3: it works, like nobody is expecting that of you. If
Speaker 3: you were in prep, it is not going to count.
Speaker 3: But we've always known that, So why are we now
Speaker 3: acting like tax is such a big burden and you
Speaker 3: didn't see it coming and you hadn't taken it into
Speaker 3: consideration when it's been there all along. Like to me,
Speaker 3: it's about only considering your post tax take home salary
Speaker 3: and making sure that that puts you in a good
Speaker 3: financial position, because tax is just a given. It literally
Speaker 3: gets taken out of your salary before you even see it,
Speaker 3: like you can't take it home, and then you know
Speaker 3: you have to pay the taxman later it doesn't come
Speaker 3: into your account and you create some kind of emotional
Speaker 3: relationship with it, and you know, go, oh my gosh,
Speaker 3: but you know that twenty nine thousand, four one hundred
Speaker 3: and sixty seven dollars that I have to pay in
Speaker 3: tax I was actually going to buy a new car
Speaker 3: with or that was going to be my home deposit.
Speaker 3: It never was going to be that for you. So
Speaker 3: I think that we really need to reframe how we
Speaker 3: view tax as it's the amount of money that you
Speaker 3: earn to put you in the best possible position, and
Speaker 3: that is being in the privileged position of working and
Speaker 3: living in Australia. Right, Like I just think from my perspective,
Speaker 3: I get so confused when people are like, oh my god,
Speaker 3: I just I didn't know this, Like, if you didn't
Speaker 3: understand the process, I get it. But to act like
Speaker 3: tax is such a burden on you and stops you
Speaker 3: from living your best life, that's not the case at all.
Speaker 3: In fact, it helps you leave your best life and
Speaker 3: is usually the reason why you're actually able to drive
Speaker 3: an income because most of us relied on the public
Speaker 3: education system or their healthcare system at some point, whether
Speaker 3: it always you or family members that have relied on that.
Speaker 2: To put you in the best possible position.
Speaker 3: Anyway, I could ranch about this all the time.
Speaker 2: That makes so much sense.
Speaker 4: It's really hard to look at the money that is
Speaker 4: being taken out, but when you explain it like that,
Speaker 4: it makes sense, and I guess I'm happy about it.
Speaker 3: Yeah, Like, let's just look at your take home salary
Speaker 3: and what we can do with that and stop going,
Speaker 3: oh my god, but pre tax, it would have been no,
Speaker 3: pre tax was always pre tax, like tax always existed. Yeah,
Speaker 3: I'll stop ranting about that because they could go on
Speaker 3: and on about it for today. But summarizing all of
Speaker 3: that part of our conversation, the lowest tax rate in
Speaker 3: Australia is nineteen percent. The highest is forty five percent,
Speaker 3: which is only charged on income over one hundred and
Speaker 3: eighty thousand dollars. In love be nice, So I'm gonna
Speaker 3: let those people who earn more than one hundred and
Speaker 3: eighty thousand, I'll pay.
Speaker 2: That tax, right, We'll never have to worry about it, exactly.
Speaker 3: And most people actually sit in that middle bracket of
Speaker 3: earning between forty five thousand and one hundred and twenty thousand.
Speaker 2: Dollars, you are also taxed.
Speaker 3: I feel like this is just a and you're taxed
Speaker 3: on this and your tax on this, Like I could
Speaker 3: be the opera of tax, Like can you get a
Speaker 3: tax and you get your tax, Like.
Speaker 2: It just goes on and on.
Speaker 3: But you're also taxed on superannuation contributions and earnings. And
Speaker 3: there are obviously lots of tax benefits for paying money
Speaker 3: into your super fund. In fact, I've said it before
Speaker 3: on the podcast, I think super tax right really sexy.
Speaker 3: It is fifteen percent up until twenty seven five hundred
Speaker 3: dollars each financial year, which is arguably the closest thing
Speaker 3: we're going to get to a tax haven here in Australia,
Speaker 3: Like if you earn enough money to be taxed, it's
Speaker 3: still lower than that.
Speaker 2: Right, But that's pretty good.
Speaker 3: So literally, anybody who is earning an income, putting more
Speaker 3: money towards their superannuation is making a return or making
Speaker 3: a benefit, is actually getting tax back by putting money
Speaker 3: into their super. I'm not saying that that strategy is
Speaker 3: going to be right for you, because I think I've
Speaker 3: said it before on the podcast. I from my perspective,
Speaker 3: I'm thirty one. I still think I'm relatively young. I mean,
Speaker 3: my younger sister would beg to differ. She thinks I'm
Speaker 3: really old. But I don't contribute extra amounts of money
Speaker 3: to my superannuation. And I get asked that all the time.
Speaker 3: And the reason I don't is because I have an
Speaker 3: investment portfolio outside of superranuation, and every intention inside of
Speaker 3: me says that I would like to retire before the
Speaker 3: age of sixty five, and right now, if I made
Speaker 3: heaps of additional contributions to super and had the sexiest
Speaker 3: super ever, I would still have to work till sixty
Speaker 3: five to be able to access that properly, right, right,
Speaker 3: But if I build up my investment portfolio outside of superanuation.
Speaker 3: I can lean on that until I retire. So yes,
Speaker 3: SUPER is absolutely a priority. I pay it for myself,
Speaker 3: but I'm not going above and beyond because I kind
Speaker 3: of want to have access to it before then privileged.
Speaker 3: But I need to talk about why I do that,
Speaker 3: because if I just said to you, no, Beck, I
Speaker 3: don't pay additional SUPER, you might deduct from that conversation
Speaker 3: that to me is not important. Yeah, it's really impactly
Speaker 3: what to exactly, but it's really important to me. But
Speaker 3: what's more important to me is my financial freedom at
Speaker 3: this point in my life. And at some point, hopefully
Speaker 3: in the future, I'm going to have the cash flow
Speaker 3: to be able to like bump it up and you know,
Speaker 3: make both look really sexy. But at the moment, the
Speaker 3: entire plan is to not have my entire net wealth
Speaker 3: sitting in superinuation. It's kind of split between my investment
Speaker 3: portfolio and my SUPER and when I retire, I'm going
Speaker 3: to rely on both of those, not just one or
Speaker 3: the other.
Speaker 2: Does that make sense? Very clever? You should be like
Speaker 2: a financial advice Oh my god, I was one time.
Speaker 3: Yeah, it was really fun, and then I decided to
Speaker 3: just do this.
Speaker 2: Yeah, yeah, yeah. Yeah.
Speaker 3: But following on from that, the other important point that
Speaker 3: I have written down here that I think is really
Speaker 3: important to talk about is that tax rates for foreign
Speaker 3: residents are substantially higher. But to keep this episode really
Speaker 3: tight and light and fun, Titan light and fun on
Speaker 3: a tax episode, good from me, we won't actually go
Speaker 3: into the situation for non residents because there just isn't
Speaker 3: enough time today.
Speaker 2: Okay, hopefully we do talk about that eventually.
Speaker 3: We absolutely will, but I think it'll be an entire
Speaker 3: podcast on if you are a non resident. Here are
Speaker 3: all the things that you can do to put yourself ahead,
Speaker 3: because it's not just about talking about the tax rates.
Speaker 2: On that. Let's have a little cheeky break. Go grab
Speaker 2: a tea. I need a cup of coffee. I need
Speaker 2: a cup of coffee.
Speaker 3: Let's go, Let's go, let's go get a coffee.
Speaker 2: Okay, we are Backfee.
Speaker 4: I just want to really quickly address something and it's
Speaker 4: not part of the podcast.
Speaker 2: It's not part of it. We can cut this out
Speaker 2: if we need to.
Speaker 3: It that you brought two water bottles this recording. I
Speaker 3: usually ring four, but you actually don't. I'm so confused
Speaker 3: then that anyway, carry on.
Speaker 4: Well, I just wanted to say that for anyone listening
Speaker 4: that's outside of Victoria Prep, that you said something that
Speaker 4: you said before that prep means kindy and preschool comes
Speaker 4: before kindy, and you're saying prep which means kindy.
Speaker 2: That's all I wanted to say.
Speaker 3: What so an American term, no in this room is
Speaker 3: shaking their head. I should know better, you know what,
Speaker 3: I can't remember. I went to school for prep in Tasmania,
Speaker 3: so I don't I don't know. I just thought it
Speaker 3: was called prep.
Speaker 2: Yeah, I think it's a Victorian.
Speaker 3: I've heard it be called pre k.
Speaker 2: Pre k is pre school.
Speaker 3: Oh yeah, okay, cool, Well tell me you don't have
Speaker 3: kids without telling me.
Speaker 2: I've just got no idea. Why would I know that? Yeah,
Speaker 2: that's fair.
Speaker 3: Flex only had to do prep once. Oh I think
Speaker 3: that is a flex.
Speaker 2: I'm not too shocked. Now let's get back into it.
Speaker 2: So we're talking all about tax learn about this in prep?
Speaker 2: We did learn about this in prep.
Speaker 3: I definitely didn't learn, Claire. I was like coloring outside
Speaker 3: the lines and talking about blocks. Yeah, like you know,
Speaker 3: probably eating tan buck.
Speaker 2: But yeah, but.
Speaker 4: If anyone was going to learn about texts in school,
Speaker 4: I feel like it would have been.
Speaker 3: Yeah, my dad is and was an accountant, so oh
Speaker 3: maybe I did, but I didn't listen subconsciously.
Speaker 2: I see, I see, I see, so recap.
Speaker 4: Yeah, when calculating your tax is it as simple as
Speaker 4: say I earn sixty k, I get taxed at thirty
Speaker 4: two point five percent on that entire sixty k.
Speaker 2: No. No, no, okay, no no.
Speaker 3: And I think that's where a lot of people get confused,
Speaker 3: because you might go, tax is really easy. I'm going
Speaker 3: to take sixty and then minus thirty two point five percent.
Speaker 3: That makes sense, right, But that's actually not how it works.
Speaker 3: So what would happen is you would have to make
Speaker 3: a little chart. I'm really sorry here, but essentially what
Speaker 3: would happen is you would draw down your income. You go, okay,
Speaker 3: we're earn sixty grand, but of that sixty thousand dollars
Speaker 3: my first eighteen two hundred dollars, no tax, nothing. Put
Speaker 3: that to the site. The next amount is going to
Speaker 3: be the second tax bracket we spoke about. So that's
Speaker 3: going to be where your tax rate is nineteen cents
Speaker 3: in the dollar. So that would be twenty six eight
Speaker 3: hundred dollars. Because you fall, for that amount of money
Speaker 3: into the income bracket of between eighteen thousand, two hundred
Speaker 3: dollar and forty five thousand dollars, which on that amount
Speaker 3: you would pay five thousand and ninety two dollars in tax.
Speaker 3: And then to top that up to get to the
Speaker 3: total of sixty thousand dollars, you've got another fifteen thousand
Speaker 3: dollars to go. So for that amount of fifteen thousand dollars,
Speaker 3: you fall into the bracket of forty five thousand and
Speaker 3: one hundred and twenty thousand dollars, which means that you're
Speaker 3: paying thirty two point five cents in the dollar on that,
Speaker 3: which means you get taxed four thousand, eight hundred and
Speaker 3: seventy five dollars. So on a sixty thousand dollar income,
Speaker 3: you will pay a total tax amount of nine thousand,
Speaker 3: nine hundred and sixty seven dollars. Now, to contextualize that
Speaker 3: beck before, remember how I said when we're going through
Speaker 3: that tax table, which is obviously really hard to conceptualize
Speaker 3: on a podcast. So what I'll do is I'll post
Speaker 3: it on our Instagram and it will be up today
Speaker 3: so you can go and have a look at it.
Speaker 3: But remember how I was like, okay, well, if you
Speaker 3: earn between forty five thousand and one hundred and twenty
Speaker 3: thousand dollars, you'll pay five thousand and ninety two dollars
Speaker 3: plus that's what that amount came so, as it is
Speaker 3: being broken down, the five thousand and ninety two dollars,
Speaker 3: that actually comes from the previous tax bracket, because you
Speaker 3: will pay the total amount of tax on the amount
Speaker 3: of money between eighteen thousand, two hundred and forty five
Speaker 3: thousand dollars, So that total amount is five thousand and
Speaker 3: ninety two dollars, which is why we say, okay, you'll
Speaker 3: pay that five thousand and ninety two dollars, which is
Speaker 3: you paying nineteen cents in the dollar, and then after
Speaker 3: that you will pay thirty two and a half cents
Speaker 3: on the rest of the money that you earn.
Speaker 2: Does that make sense? Oh, that makes so much sense.
Speaker 3: Which is why from my perspective, we are a supreme
Speaker 3: tax system because you are not going to go, okay,
Speaker 3: well far out, I fall into the bracket of earning
Speaker 3: between forty five thousand and one hundred and twenty thousand dollars, Like,
Speaker 3: why do I have such a higher tax bracket? If
Speaker 3: I'm only on fifty grand, like, that doesn't seem fair.
Speaker 3: I want to be in the previous tax bracket.
Speaker 2: Well, for the first.
Speaker 3: Forty five thousand dollars you earn, you are already there,
Speaker 3: are already there, so you're only paying what, from my perspective,
Speaker 3: is really fair on tax, which is why it's kind
Speaker 3: of like a stepped tax system instead of a super
Speaker 3: strict No. Sorry, beck, you earn over forty five thousand dollars, Yes,
Speaker 3: you will be paying more tax. That is inevitable because
Speaker 3: the more money you earn, the more tax you pay.
Speaker 3: It is just how the world works. But you do
Speaker 3: get to make use of that first tax bracket of
Speaker 3: like the tax free threshold. Then you get to max
Speaker 3: out the second tax bracket and you only have to
Speaker 3: pay nineteen cents in the dollar for that amount, and
Speaker 3: then after that you are subjected to all the other
Speaker 3: tax brackets. Does that make sense?
Speaker 2: Yeah, that really makes sense.
Speaker 4: So ninety K or one hundred and twenty K or
Speaker 4: two hundred K sounds like a heap of money because
Speaker 4: it is.
Speaker 2: It actually is a lot. Yeah money. Well, let's look
Speaker 2: at what you can actually take home after tax.
Speaker 3: Yeah, okay, sexy, sexy. I like that you have said
Speaker 3: to me, all right, I'm gonna have these questions which
Speaker 3: involve you having to do maths, and I'm like, come
Speaker 3: at me, bro me, and Grade ten would have been like,
Speaker 3: are you the devil? Like I don't want to come
Speaker 3: to play with you? But now I'm right and you're
Speaker 3: ready to hear about the tax rates? All right, So
Speaker 3: if you earn forty grand, you'd pay four thousand, one
Speaker 3: hundred and forty two dollars in tax, meaning you get
Speaker 3: to take home thirty five thousand, eight hundred and.
Speaker 2: Fifty eight dollars back. Very nice.
Speaker 3: If you bump this up, I have chosen the number
Speaker 3: of ninety two thousand instead of your ninety k, but
Speaker 3: ninety two thousand dollars because this was actually the average
Speaker 3: annual salary from the Australian Bureau of Statistics in August
Speaker 3: twenty twenty two. You'll pay a total of twenty thousand,
Speaker 3: three hundred and sixty seven dollars in tax, meaning you
Speaker 3: take home seventy one thousand, six hundred and thirty three dollars.
Speaker 4: Is very depressing that that's the average annual salary, is it?
Speaker 4: I mean, it's not depressing for anyone but myself.
Speaker 3: Well, actually, I think that's an important conversation to have
Speaker 3: because when we say the average salary, that is the average.
Speaker 3: It is not the median or the mean. And when
Speaker 3: I say that, it's kind of like if I got
Speaker 3: you to imagine a bell curve right right, If you've
Speaker 3: got this big bell and in the middle, you've got
Speaker 3: what the normal people are earning. I promise you that
Speaker 3: is not ninety two thousand dollars. But if I took
Speaker 3: every single salary in Australia, from people earning unto eighteen
Speaker 3: thousand dollars all the way up to top CEOs and
Speaker 3: the billionaires, and I took all their salaries and divided
Speaker 3: it by the amount of people we have, that's how
Speaker 3: we get ninety two thousand dollars. That makes so obviously
Speaker 3: on the top end there are so many really high
Speaker 3: income owners. But it's kind of like if I said
Speaker 3: to you, okay, Beck, take the numbers three, five, ten,
Speaker 3: and twelve, and then add another number of one hundred
Speaker 3: and fifty, and then we divide that. Obviously the number
Speaker 3: is going to be higher because you've got that outlier
Speaker 3: of one hundred and fifty, right, that's not actually even
Speaker 3: close to what the three, five and ten are right, right,
Speaker 3: So that one fifty is really pushing quote the average
Speaker 3: of the group up. Yep, it's not how the world
Speaker 3: actually works. So most people are not earning ninety two
Speaker 3: thousand dollars, beck, because that's not what most people in
Speaker 3: Australia earning. That's not what average means, even though you
Speaker 3: might assume that what we actually want to go for
Speaker 3: is what's called a median salary, and amedian is what
Speaker 3: most people in Australia are earning, so median means the most.
Speaker 3: So the most people in Australia are actually earning sixty
Speaker 3: five thousand dollars, which is a lot more reasample, right,
Speaker 3: And it's a lot more I guess relatable.
Speaker 2: So I would hate for you to listen to that and.
Speaker 3: Be like, Vie, why did you pick ninety two thousand dollars,
Speaker 3: Like that's so unrelatable? It's literally because it just works
Speaker 3: with the tax brackets that I'm trying to explain it.
Speaker 3: I was just trying to be relatable and show you
Speaker 3: that I could read the ads website, okay, and I
Speaker 3: attacked you, Okay, you attacked me, but you've got some
Speaker 3: information about it as well.
Speaker 2: I'm happy about that.
Speaker 3: So most people actually earn sixty five thousand dollars, but
Speaker 3: the average annual salary is ninety two thousand dollars, which
Speaker 3: means you're going to pay twenty thousand, three hundred and
Speaker 3: sixty seven dollars and get to take home a sweet,
Speaker 3: sweet seventy one thousand, six hundred and thirty three dollars
Speaker 3: each year. If you bump that up to a salary
Speaker 3: of one hundred and fifty thousand dollars, which is big
Speaker 3: dog energy, you are going to pay forty thousand, five
Speaker 3: hundred and sixty seven dollars in tax and take home
Speaker 3: a total of one hundred and nine thousand, four hundred
Speaker 3: and thirty three dollars. Like, you're taking home literally six
Speaker 3: figures of cash. That's after tals, cash cash, cash money,
Speaker 3: Like that's so much money.
Speaker 2: Yeah.
Speaker 3: And then if you earned two hundred grand, just because
Speaker 3: you mentioned it before, you'd pay sixty thousand, six hundred
Speaker 3: and sixty seven dollars in tax, and you would take
Speaker 3: home a total of one hundred and thirty nine thousand,
Speaker 3: three hundred and thirty three dollars.
Speaker 1: Wow.
Speaker 3: Keep in mind that doesn't take into consideration like the
Speaker 3: medicare levy or any deductions that you've got or anything
Speaker 3: like that. That's just like base maths, my favorite website.
Speaker 3: If you're trying to work out, you know, oh I
Speaker 3: forgot this job increase, what would my take home salary be?
Speaker 3: It's pay calculator dot com dot au and you will
Speaker 3: put that in the show notes. It's not a government
Speaker 3: run website. It's actually just a really fancy calculator where
Speaker 3: you can like tick different boxes and it will go
Speaker 3: do you want to include or exclude superannuation or do
Speaker 3: you have a hex stare And it will actually tell
Speaker 3: you how much take home pay you'll actually get from
Speaker 3: a particular income, which I think is really sexy good website.
Speaker 3: Ten out of ten.
Speaker 2: I love that.
Speaker 4: Because you don't get shocked when the pacelet comes through,
Speaker 4: and they don't absolutely not a little bit of a
Speaker 4: different via coming through. So if I am a low
Speaker 4: income earner, not if you are not any sorry, that's
Speaker 4: very true.
Speaker 3: You are not allowed to identify as a low income
Speaker 3: inner anymore.
Speaker 2: True.
Speaker 4: I feel like spiritually I still am, but no, technically
Speaker 4: I'm not so you.
Speaker 3: Are allowed to spiritually connect with that, okay, but you're not.
Speaker 2: No, I'm not.
Speaker 4: I can't claim that anymore if I'm a low income earner.
Speaker 4: Is there any point taking a second job or I
Speaker 4: just lose it all to tax?
Speaker 3: Oh that is such a stereotypical question, and I'm actually
Speaker 3: really glad you asked.
Speaker 2: So many people say, oh my god, it's not worth it.
Speaker 3: Til deer it's worth it. But people worry that tax
Speaker 3: is going to be so high on its second job
Speaker 3: because you don't get to claim that tax free threshold
Speaker 3: and it doesn't apply if you are paid. People get
Speaker 3: genuinely so worried. They're like, oh my gosh, the tax
Speaker 3: is going to be so high on a second job
Speaker 3: because the tax free threshold isn't going to apply if
Speaker 3: you're getting paid in that job. And I guess that's true.
Speaker 3: You are just going to have to pay standard tax
Speaker 3: from the outset though with your second job. However, when
Speaker 3: you get your tax return completed, you'll actually pay the
Speaker 3: same amount of tax on your income whether you have
Speaker 3: one or multiple incomes. So if you you know, let's say,
Speaker 3: earned forty thousand dollars and you went and got a
Speaker 3: side hustle and you're earning an extra ten thousand dollars,
Speaker 3: You're literally going to pay the same amount of tax
Speaker 3: as somebody who's on a fifty thousand dollars income, right, Like,
Speaker 3: it's not going to change because it's the second job.
Speaker 3: The only I guess, gotcha is that you can't claim
Speaker 3: the tax free threshold twice.
Speaker 2: But no one can.
Speaker 3: And if you are claiming it twice, because I've heard
Speaker 3: people before they're like, oh, if you tick that box,
Speaker 3: you get paid twice. And it's like, yeah, it's going
Speaker 3: to come back in your tax return my friends, like
Speaker 3: it always does that. Also, you're in love with more,
Speaker 3: but that is not fair and that is not how
Speaker 3: it works. So I think it's really important to remember
Speaker 3: that it doesn't actually matter how many jobs you've got.
Speaker 3: You could have fifty jobs, and if you earn one
Speaker 3: hundred thousand dollars from those fifty jobs, you're going to
Speaker 3: earn exactly the same amount of money as somebody who
Speaker 3: has one hundred thousand dollars income.
Speaker 2: Does that make sase? So you're basically just getting like
Speaker 2: a pay rise.
Speaker 3: Literally you're getting a pay rise, and I mean you're
Speaker 3: trading your time and energy and effort for money, and
Speaker 3: you are going to be treated fairly in our tax system.
Speaker 3: You're not going to be charged above and beyond because
Speaker 3: it's a second job. You're just not going to be
Speaker 3: able to claim that tax free threshold. But nobody can anyway,
Speaker 3: even if they switch jobs halfway through the year. Right, So,
Speaker 3: if you're an Australian resident for tax purposes, as we've
Speaker 3: said before, the first eighteen thousand, two hundred dollars you
Speaker 3: earn is free, which is a money win, and you
Speaker 3: usually nominate one employer to be able to claim that
Speaker 3: tax free threshold, which means they will not take any
Speaker 3: tax from your earnings before you reach that threshold, which
Speaker 3: we've talked about already on this episode, but I think
Speaker 3: it's really important to reiterate that first amount of eighteen thousand,
Speaker 3: two hundred dollars is tax free regardless of who you are,
Speaker 3: whether you earn more than two two hundred thousand dollars
Speaker 3: or you earn less than twenty thousand dollars, like, you
Speaker 3: are going to be able to get that for free,
Speaker 3: because that's how our tax system works. It is stepped.
Speaker 3: It is not just like okay, cool, well you go
Speaker 3: in this bucket over here.
Speaker 2: Does that make sense? Yeah, that makes sense, that makes sense.
Speaker 4: I am hoping at some point, if you haven't done
Speaker 4: it already, we could do a whole episode on deductibles
Speaker 4: and like claim your tax. Yeah we did one ages ago,
Speaker 4: but I think it's time for an update because each
Speaker 4: and every single year, the tax system changes the rules,
Speaker 4: just like the superannuation system. Get this complete sidetrack. But
Speaker 4: since super became a mandatory inclusion for all employees in
Speaker 4: nineteen ninety two, BECK, there have been hundreds of changes
Speaker 4: to the superannuation system.
Speaker 2: How is that fair? Anyway?
Speaker 3: I know it's getting bigger and better and changing for
Speaker 3: the better, but like, oh my gosh, the tax system
Speaker 3: is very similar, Like there's just changing rules each year,
Speaker 3: and each year the ATO kind of like says, hey, guys,
Speaker 3: this year, we're looking out for this because the world changes.
Speaker 3: Righteen years ago, were the ATO looking out for influencers
Speaker 3: claiming their holidays to Disneyland? No, they weren't, because it
Speaker 3: wasn't a thing. But now they're looking out for it.
Speaker 3: So I think it's just interesting to cover. From my perspectives,
Speaker 3: let's do a p on that idea.
Speaker 2: Great thank you.
Speaker 3: All right, let's go plan that. I think we're done
Speaker 3: here today. I feel like this has been short but sweet,
Speaker 3: but probably not that short because I can go on
Speaker 3: and on about tax So I hope you guys have
Speaker 3: a good day, and if you've made it to the end, congratulations.
Speaker 2: It's honestly gold star for you. I love you. Have
Speaker 2: a really good rest of the week, bie, guys.
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