Australia: How much Is My Net Salary? - (Tax) TFN Declaration Form (Part 1)

To know how much is your net salary, we'll discuss first some basics.

Once you are employed by the company, the common list of forms that would be typically handed out at the commencement of employment are TFN Declaration form, Superannuation choice form, Fair Work Information Statement, Contract, New Employee Form (internal document to capture banking details and emergency contact).

Question 1 - TFN: It is not an offence not to quote your TFN. However, if you fail to quote your TFN after 28 days, the employer must withhold an amount at the highest marginal rate plus medicare levy from any payment made which is 47% as of writing. (TFN is also quoted to the superannuation fund when making a contribution)

Question 6 - Basis of Payment: If you are in doubt as to which category to fall under, check with the payer.
  • A full-time employee has ongoing employment and works, on average, around 38 hours each week. The actual hours of work for an employee in a particular job or industry are agreed between the employer and the employee and/or set by an award or registered agreement.
  • A part-time employee works on average less than 38 hours per week. He is entitled to the same benefits of a full-time employee but on a pro-rata basis. He can be permanet or on a fixed-term contract.
  • A casual employee does not have a firm commitment in advance from an employer about how long they will be employed for, or the days (or hours) they will work. A casual employee also does not commit to all work an employer might offer.
Question 7 - Are you an Australian Resident for tax purposes?: Full definition can be found on the ATO's website.
  • Resident - if you are an overseas student enrolled in a course at an Australian institution that is more than 6 months long; visiting Australia for more than 6 months and for most of that time work in one job and live at the same place; migrate to Australia and intend to reside here permanently
Question 8 - Tax-free Threshold: Tick 'Yes' if you are certain that your total income for the year will be $18,200 less. Generally, one would claim the tax-free threshold with the payer and he will pay the rest at the end of financial year. (I remember my husband asking me on what to tick and since I had no idea what it meant, I just said tick the 'yes'. Hence, I am expecting we'll be paying additional taxes this end of financial year. 😆)

Medicare levy will increase from 2% to 2.5% starting July 1,2019 (scrapped by the gov't)
Increase in threshold changes starting July 1, 2022-23 and July 1, 2024-25

Withholding Declaration Form - you use this form if you want to vary the amount withheld. Downward variations are not allowed until approved by ATO.

Fair Work System - like DOLE. Fair work system covers most Australian workplaces. If not, they will be covered by their state system.

Fair Work Information Statement - contains information about the national employment standards, termination of employment, flexibility arrangements and others.

Unfair Dismissal - employees whose remuneration exceeds $145,000 are not protected from unfair dismissal under the Fair Work Act and special arrangements will apply for small businesses with fewer than 15 employees.

The amount to be withheld from your salary is determined primarily by the answers you have provided in the form. They call it PAYG (Pay as You Go) Withholding. In the Philippines, taxes are also withheld and adjusted at year end while in Singapore, there is no withholding and have to be paid only upon receipt of your NOA.

For more readings...

Taxation in Australia
Maximising Your Return
How To Keep Your Records
Preparing Your Tax Return

*All those in blue are linked to their respective websites. Click for more information.

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